DairyBusiness Update for March 8, 2013

‘Solids’ trade balance shrinks

January 2013 dairy product exports were equivalent to 12.3% of U.S. milk solids production, below the pace established in 2010-12, according to the U.S. Dairy Export Council and National Milk Producers Federation. From May 2010 to October 2012, exports represented 13.5% of U.S. milk solids production. Meanwhile, imports as a percent of milk solids production were 3.7% in January 2013.


January 2013 U.S. export volumes improve

Overall U.S. dairy exports were up 11% by volume and 6% by value in January vs. December, according to monthly estimates from the U.S. Dairy Export Council (USDEC). Relative pricing was more favorable in January than in the last quarter of 2012, improving U.S. competitiveness.

Cheese (+13%), butterfat, dry whey and lactose volumes were all improved, and the export value of $444.4 million was an eight-month high. Cheese exports were equivalent to 5.2% of total cheese production for the month.

The major exception to the trend was nonfat dry milk/skim milk powder (NDM/SMP), which still hasn’t turned the corner. NDM/SMP shipments in January were down 18% from the prior year. From November-January, U.S. NDM/SMP exports were equivalent to just 38% of production, below the rate of exports needed to prevent inventories from accumulating. As a result, U.S. stocks of NDM have expanded by 66,000 tons in three months.

Dry whey exports were down 14% from a year ago, but January volume was the most since last June.


California Class 1 prices up slightly

California’s April Class I milk price is $19.49/cwt. for the North and $19.77/cwt. for the South, up 16¢ and 17¢, respectively, from March 2013, and $2.28 and $2.29 above April 2012. 

Through the first four months of 2013, the Class 1 average is $19.72/cwt. for the North, up from $18.30 for the same period in 2012; the January-April 2013 Class 1 price in the South is $20.00/cwt., up from $18.57/cwt. a year ago.

The federal order April Class I base price will be announced on March 20.


More milk, weaker Class III prices projected

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released March 8, raised projected 2013 milk production estimates by about 900 million lbs. from a month earlier. The higher outlook was  largely due to a slower pace of herd reduction and higher first-quarter milk production per cow. 

• 2013 production and marketings were projected at 201.9 billion lbs. and 200.9 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.8% from 2012. 

• at 200.3 billion lbs. and 199.3 billion lbs., 2012 milk production and marketings were up 2.1% from 2011. 

Projected prices for cheese and whey were lowered, due to expectations of increased production and moderate demand. The forecast butter price was unchanged, although the range tightened. The forecast price of NDM was raised, as stronger export demand is expected. 

As the result, the 2013 Class III milk price forecast was reduced from last month to a range of $17.55-$18.15/cwt.

The projected Class IV was increased, to a range of $17.35-$18.05/cwt. The 2013 projected all-milk price was raised to $19.00-$19.60/cwt.

• Feed price outlook: On the cost side of the dairy equation, the 2012/13 estimated season-average corn price range   was lowered, in a range of $6.75-$7.45/bushel. The U.S. season-average soybean price was narrowed to a range of $13.80-$14.80/bushel; and soybean meal prices were projected down $10/ton at the midpoint, in a range of $425-$445/ton.

• Beef price outlook stays strong: The top end of projected beef prices was lowered slightly, to a range of $125-$132/cwt. potentially impacting cull cow prices. Beef production estimates were raised, largely due to heavier expected carcass weights. Estimated steer and heifer slaughter was reduced for the first quarter of 2013, but cow slaughter was raised. 


California cow numbers steady

Canadian dairy cow and heifer numbers held virtually steady in the past year, according to a semi-annual report from USDA and Statistics Canada. As of Jan. 1, 2013, Canadian producers had an estimated 960,600 cows on their farms, an increase of just 500 head from a year earlier.

Canadian cow numbers are about equal to those in Pennsylvania and Minnesota, combined.

Dairy replacement heifers (1 year old or older) totaled 472,600 head, up 4,200 from Jan. 1, 2012. It's the highest total in the past five years. Canadian replacement heifers per 100 cows totaled 49.1 on Jan. 1, 2013, up about 0.3 heifers from a year earlier. The ratio of Canadian heifers per 100 cows is almost identical to U.S. numbers released earlier this year.


Michigan, local police get $300,000 from dairy farm worker raid

U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) presented the Michigan State Police (MSP) and Huron County Sheriff's Office (HCSO) with nearly $300,000 obtained from an illegal immigrant investigation and prosecution of a Michigan dairy farm.

The funds constitute a portion of the money obtained when the owners and the business itself, Aquila Farms LLC, Bad Axe, Mich., were ordered to pay fines and payments in lieu of forfeiture of more than $2.7 million. The funds were distributed in accordance with HSI's asset-forfeiture program that applies to assets obtained as proceeds or instrumentalities of criminal activity.

The case first made headlines in May 2007 when HSI special agents executed search warrants at the farm as part of the investigation that resulted in the administrative arrests of dozens of illegal aliens. The investigation revealed the dairy operation employed 78 different illegal aliens from approximately 2000 through 2007, which constituted almost 75% of its workforce over that time period. The company also failed to conduct the necessary inquiries to determine the employment eligibility of their work force, as required by federal immigration laws.


MARKETS: Blocks, butter prices up; Class III futures mixed in a narrow range

Today's market closing prices:

Butter: up 1.5¢, to $1.63/lb.

Cheddar blocks: up 1.0¢, to $1.60/lb.

Cheddar barrels: unchanged at $1.58/lb.

Grade A nonfat dry milk: unchanged at $1.4975/lb.

Extra Grade nonfat dry milk: unchanged at $1.56/lb.

Class III milk: -15¢ to +7¢ through March 2014. Based on current CME closing prices, the 2013 average is  $18.06/cwt.; and the 2014 average is $16.67/cwt.


Corn higher; soybean and meal futures mostly lower

Corn: +5¢ to +14¢ per bushel through December 2013. The 2013 average is $6.45/bu.

Soybeans: +5¢ to -12¢ per bushel through November 2013. The 2013 average is $14.03/bu.

Soybean meal: -$0.10 to -$3.60/ton through December 2013. The 2013 average is $400.67/ton.


For a sample copy of DairyBusiness Update, or subscription information, visit http://dairybusiness.com/Update.php or phone: 800-334-1904, ext. 222.


Stay connected to DairyBusiness Communications on the go with the DairyBusiness News section on our HolsteinWorld APP for iPhone and Droid. Simply go to http://www.widgetbox.com/mobile/app/holstein-world-rblodgett 


(Website) (Facebook) (Twitter)