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CIH: Late September margins improved

CIH: Late September margins improved
Dairy margins improved during the first half of September, as lower projected feed costs against a backdrop of steady milk prices helped to strengthen projected forward profitability, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC.
On both an absolute and relative basis, margin projections are currently strongest in nearby Q4 where they are above the 80th percentile of the previous 10 years, with margin projections through the first half of 2014 above the 70th percentile.
USDA’s September World Ag Supply & Demand estimates report raised the projection for corn production and ending stocks. Milk prices wile continue to move sideways, with Class IV futures maintaining their historically strong premium over Class III contracts. Part of that strength would appear to stem from the export market as butter/milkfat shipments surged during July.