Income Over Feed Helps Producers

Dairy producer’s income over feed costs hit a record level gaining both a higher milk price and lower feed costs. The latest numbers show that income over feed more than doubled from February of last year.

“It shows that U.S. dairy producers are in for some very profitable times,” FC Stone’s Bill Brooks said on Tuesday’s DairyLine broadcast.

Producers just need to get the milk out of their cows to take advantage of the profitability this year. Brooks expects a slow-down in 2015 based on where futures are trading for milk, corn, and the soybean complex, but still will be slightly above average for next year.

“You have your fingers crossed for livestock producers, but for our dairy producers in general we will have a couple of good years for them to try and build up those balance sheets and get more comfortable on their financial position,” he said.

Looking at prices at the CME – Cash butter shot up 10 cents Friday to $1.88, but has been quiet the first two days of trading this week.

“I believe there could have been end of the month issues,” Brooks reported.

We have seen the butter market pick up on previous Fridays. Six out of nine Fridays this year have seen double-digit trades.

“The butter market is adequately supplied,” he said. “There’s plenty of butter out there in storage but the folks that own it are holding on to it with pretty decent confidence because inventories aren’t burdensome.”

Looking at the current cheese prices - CME blocks are holding at $2.2275, while the barrel price continues to slip, losing 3 1/4-cents on Tuesday to $2.1275.

“I think we’ll see some seasonal declines, but not necessarily large drops,” Brooks said.