MARKET WATCHMARKET WATCH producers poised to enjoy a run-up in pricesDAIRY PRICES

Feb Mar Apr May July AugJune Sept Oct Dec Jan2012

Dec Jan2013

Nov Feb Mar MarApr May June July Aug Sept Oct Nov FebMay2010

AprJune July Aug Sept Oct Nov Dec Jan2011

CA Class1 price

Federal Class I price$13

$15

$17

$19

$21

$23

$25 Apr. 2013: $17.66 High: $21.78 Low: $13.80 Apr. 2013: $19.77 High: $23.84 Low: $15.64Fluid milk prices (in dollars)

Lee MielkeSyndicated Market Columnistlkmielke@juno.com

� e USDA’s latest livestock, dairy and poultry outlook lowered its 2012-2013 corn price forecasts slightly from March to $6.65 to $7.15 per bushel. Higher world grain production and lower estimated U.S. domestic feed use were given as the reason. Soybean meal was also lowered slightly to $415 to $435 a ton.

� e lower price for concentrate feeds, along with a slightly higher expected all-milk price, will improve producer margins somewhat, the outlook said, but not enough to boost herd size. Herd size was projected at 9.195 million head for 2013, unchanged from March’s forecast and below 2012. Output per cow was lowered in April to 21,945 pounds, based on lower February milk-per-cow data.

Blocks closed in mid-April at $1.84 per pound, more than 30 cents above a year ago. Barrels ended in mid-April at $1.77, 31 cents above a year ago but 11 cents below the blocks. � e AMS-surveyed U.S. average block price hit $1.6932, while the barrels averaged $1.6673.

Recent reports of tighter-than-expected worldwide milk supplies helped to increase demand for U.S. cheese, according to the April 12 Dairy Market News (DMN). � e Foreign Agriculture Service (FAS) export report for January-February 2013 stated that cheese exports for the period were up 9 percent from a year ago. � e higher prices and good demand have cheese plants increasing production, and many are operating at full production to fi ll orders, DMN reported.

Cash butter closed in mid-April at $1.74. � e AMS butter average was $1.6618.

� e FAS reports exports of butter and milk fat for January-February 2013 totaled 20 million pounds, up 34 percent or fi ve million pounds from a year ago. � ose exports accounted for 5.6 percent of U.S. butter production for the time period.

Cash Grade A nonfat dry milk closed mid-April at $1.7850, and Extra Grade fi nished at $1.70. Dry whey averaged 57.21 cents.

� e Daily Dairy Report (DDR) says the skim milk powder (SMP) price index retreated slightly, down 3.2 percent, at this week’s Global Dairy Trade (GDT) auction from the previous biweekly auction. � e trade-weighted average price index for all products increased just 0.6 percent, the lowest biweekly gain since December 2012, the DDR said, but most GDT product prices

16 Progressive Dairyman Issue 7 • May 1, 2013

Apr2012

Sept Oct FebJan2013

MarMay AugJune July Nov Dec

2011

2012

$1.20

$1.30

$1.40

$1.50

$1.60

$1.70

$1.80

March 2013: $ 1.60 High: $1.75 Low: $1.21

Non-fat dry milk

2012

5/5/12

10/6/12

11/3/12

12/1/12

1/5/13

3/2/13

4/6/134/13/13

2/2/13

7/7/12

8/4/12

9/1/12

4/21/12

6/2/12

2011

$1.45

$1.65

$1.85

$2.05

$2.25

4/4/13

4/5/13

4/8/13

4/9/13

4/10/13

4/11/13

4/12/13

4/13/13

3/25/13

3/26/13

3/27/13

3/28/13

4/1/13

4/2/13

4/3/13

$1.67

$1.70

$1.73

$1.76

$1.79

$1.82

$1.85

$1.88

$1.91

Apr. 13, 2013: $1.84 High: $2.15 Low: $1.75

Cheese (weekly average in dollars)

Apr2011

MarMay June July Aug Sept Oct Nov NovDec Feb FebMar Apr May June July Aug Sept Oct

Futures

Jan2012

Jan2013

Dec

20132014

2015

$13

$15

$17

$19

$21

$23 Class III (in dollars) March 2013: $16.93 High: $21.67 Low: $15.23

Markets showing beginning of run-up

4/21/12

5/5/12

7/7/12

8/4/12

9/1/12

10/6/12

1/5/13

2/2/13

3/2/13

4/6/134/13/13

12/1/12

11/3/12

6/2/12

2011

2012

$1.25

$1.50

$1.75

$2.00

$2.25

Apr. 13, 2013: $1.74 High: $2.16 Low: $1.31

Butter (weekly average in dollars)

3/26/13

3/27/13

3/28/13

4/1/13

4/2/13

4/3/13

4/4/13

4/5/13

4/8/13

4/9/13

4/10/13

4/11/13

4/12/13

4/13/13

3/25/13

$1.62

$1.64

$1.66

$1.68

$1.70

$1.72

$1.74

$1.76

$1.78

remain well above historical averages and infl uenced by seasonally lower off erings by Fonterra.

GDT prices for Fonterra-produced butter and cheddar cheese for June and July deliveries settled at U.S.-price equivalents in excess of $2 per pound, the DDR reported. European cheese and butter prices currently exceed $1.90 and $2.10 per pound respectively. “� erefore, U.S.-produced cheese and butter are also price-competitive with Oceania and European-produced product.”

DDR analyst Sarina Sharp reported in her April 12 Daily Dairy Discussion that Fonterra, which handles most of New Zealand’s milk

supply, reported a 16.3 percent drop in March milk collections, relative to a year ago. � e steep decline followed a 2.3 percent shortfall in February, according to Sharp; however, season-to-date collections are up 2.8 percent from the same 10-month period last year.

European milk production is also slower than normal; Eurostat reported a 2.2 percent drop in January deliveries. According to Sharp, output has been lower than a year ago in every month since July 2012, and indications are that “U.S. dairy producers are poised to enjoy a global run-up in dairy product prices.” PD

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Issue 7 • May 1, 2013 Progressive Dairyman 17