DairyBusiness Update for 11.20.13
December federal order Class I base price up 17¢
The December federal order Class I base milk price was announced by USDA this afternoon at $20.37/cwt., up 17¢ from November, but $1.02 below December 2012. It equates to about $1.75/gal. That brings the 2013 Class I average to $18.84/cwt., up from $17.46/cwt. in 2012, and compares to $19.13 in 2011, $15.35 in 2010, and $11.48 in 2009.
The 2-week AMS-surveyed butter price used to calculate the Class I value averaged $1.4916/lb., down 6.4¢ from November. Nonfat dry milk averaged $1.8856/lb., up 5¢. Cheese averaged $1.8774/lb., up 8.4¢, and dry whey averaged 57.49¢/lb., down fractionally.
The next Livestock Gross Margin-Dairy (LGM-Dairy) sales period begins Friday afternoon, Nov. 22, according to Alan Zepp, Risk Management Program coordinator with Pennsylvania’s Center for Dairy Excellence. LGM-Dairy will be offered for sale by crop insurance agents, with producers eligible to purchase margin insurance for a 10-month period (January-October 2014), or any combination of months during that period.
The January-October 2014 average of expected margins is $13.96/cwt., above the 3-year average for the January-October period of $13.35/cwt.; still more than $1.50/cwt. above the 5-year average actual margin of $12.23/cwt.; and above the 10-year average of $12.72/cwt.
The premium for a $0 deductible policy to insure a $13.98/cwt. margin is estimated at 52¢/cwt. (12¢/cwt. to insure a $12.98/cwt. margin for a $1 deductible policy). Read more …
Once holiday orders are filled, butter and cheese prices will likely decline lowering the Class III price, according to the November Dairy Situation and Outlook from Bob Cropp, Professor Emeritus with the University of Wisconsin-Madison. The December Class III price could fall in the $17.80-$17.90/cwt. range. But, higher nonfat dry milk prices could keep the December Class IV price near $20.60/cwt.
With a likely increase in milk production, the Class III price could fall below $17.00/cwt. during the first quarter of 2014 and average in the low $17s for the first half of the year. The continued export level of nonfat dry milk could keep the Class IV price in the high $19s first quarter of 2014, and above $18.00/cwt. for the reminder of next year. Current Class III dairy futures are not as optimistic, settling in the high $16s first half of the year and in the low $17s for the second half. Class IV dairy futures are settling in the high $19s first quarter and above $18.00/cwt. for the remainder of the year. Read more ...
Since launching in early 2012, the REFUEL / got chocolate milk? campaign by the Milk Processor Education Program has been gaining momentum.
MilkPEP recently conducted new consumer research into the current “My After” campaign, finding that MilkPEP could build on the strengths of the effort to increase the likelihood that athletes would choose chocolate milk after exercise.
Backed by the Women’s Ski Jumping USA team and the USA Hockey team, a new print, television, online and in-store campaign showcases that drinking low-fat chocolate milk after strenuous exercise helps athletes refuel and rebuild their bodies. In addition, a webisode series at www.gotchocolatemilk.com shares an exclusive look at how these athletes drink chocolate milk to recover as part of their preparation to represent the United States at the Sochi 2014 Olympics in February. View the campaign teaser video here. Read more ...
2014 RFS proposal: A volume of uncertainty
The U.S. Environmental Protection Agency’s 2014 proposed rule for Renewable Fuels Standards (RFS) sets large volumes of biofuel use across several broad categories of fuel types, but represents a significant reduction in mandated volumes from legislated levels. The EPA has once again proposed to significantly reduce the cellulosic mandate (from 1.75 billion gallons to just 17 million gallons) but, in contrast to previous years, has also proposed to reduce the overall mandate by more than 3 billion gallons.
Under the proposed volumes, biofuel prices and the blend wall will largely determine a fairly narrow range of about 460 million gallons – about a day and a half worth of U.S. motorfuel consumption – where much of the action in the biofuels market is likely to occur. It is this volume which will intersect the blend wall, influencing RIN prices and where biodiesel, corn ethanol and sugarcane ethanol imports will face off, according to USDA economists Seth Meyer and Rob Johansson. Continue reading at: http://farmdocdaily.illinois.edu/2013/11/proposed-rules-2014-rfs.html
Mielke’s Market Daily
(A daily wrap-up of dairy markets and the things affecting them, from DairyBusiness Update associate editor Lee Mielke)
Cash dairy traders kinda yawned at yesterday’s October Milk Production report and Global Dairy Trade auction. The block cheese price was unchanged for the third session in a row this morning, holding at $1.82/lb. Two sales occurred at the current price. The barrels dropped 1¢, to $1.7450/lb., on an uncovered offer, following yesterday’s 0.25¢ slip. The spread now stands at 7.5¢.
FC Stone dairy broker, Dave Kurzawski, viewed the Milk Production report as “neutral” in this morning’s eDairy Insider Opening Bell, and reported that the average cheddar cheese price on yesterday’s GDT gained 4.5% from two weeks ago. He added that “Higher international prices help make U.S. cheese attractive, but exports have been excellent all year and market participants are more concerned with the domestic market. We expect domestic cheese sales to slow down a little bit."
Butter was unchanged for the fourth consecutive session this morning, holding at $1.65/lb. Two bids at that price went unfilled, and an offer at $1.66/lb. was left on the board again.
Kurzawski’s read is that “the spot market reflects some last-minute holiday buying, but is not representative of what will happen even in the very near term as far as butter availability and demand." He cautions: "The lackluster response in the futures market indicates we have plenty of butter.”
A sale of cash Grade A nonfat dry milk edged the price lower, to $1.9625/lb. this morning, but an unfilled bid took it back up to yesterday’s close of $1.9650/lb. The Grade A is down 1¢ on the week, losing 0.75¢ yesterday and 0.25¢ on Monday. Extra Grade remains at $1.9650/lb., with no activity.
Today’s market closing prices:
Butter: unchanged, at $1.65/lb.
Cheddar blocks: unchanged, at $1.82/lb.
Cheddar barrels: down 1¢, to $1.7450/lb.
Grade A nonfat dry milk: unchanged, at $1.9650/lb.
Extra Grade nonfat dry milk: unchanged, at $1.9650/lb.
CDFA’s latest powder price: The California Department of Food and Agriculture shows their latest nonfat dry milk prices at $1.8634/lb. on sales of 8.25 million lbs., for the week ending Nov. 8. The following week saw the price inch up to $1.8727/lb., on sales of 6.2 million lbs.
• DairyUS welcomes a new generation to RealSeal.com.
• The benefits of feeding calves 3x per day, Dr. Tom Earleywine, Land O’ Lakes.
Today in DairyBusiness Weekly:
(Our digital-only magazine)
- DairyBusiness Weekly 11.20.13: McDonald’s thanks dairy farmers
- NMPF: Transition complete, but business unfinished
- 4 trends impacting dairy
- Trust, but verify: Cameras as a management tool
- Starlings are no darlings to dairy farms
- All-American Dairy Foundation Board of Trustees elects officers, sets agenda
- One person’s opinion: ‘A different day, a different judge’
- McDonald’s thanks our nation’s dairy farmers
- Check out our industry briefs and show and sale calendar, view our product spotlight, listen to our podcasts and more!
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