Dairyline from D10 price is expected to more than offset the higher whey price, resulting in a reduced forecast Class III price. Look for the 2012 Class III average to range $16.70-$17.40 per hundredweight (cwt.), down from the $17.10-$17.90 expected a month ago, and compares to $18.37 in 2011 and $14.41 in 2010. Lower butter and NDM prices result in a lower Class IV price, now projected to average $16.25-
$17.05, down from $16.45-$17.35 expected in the last report, and compares to $19.04 in 2011 and $15.09 in 2010. The WASDE report was the topic of Dairy Profit Weekly editor Dave Natzke in his Friday DairyLine update. He reported on the weakening cheese, butter and milk powder prices and the rising futures prices for corn and soybeans. He gave as an example, February 8 annual average 2012 Class III milk fu-
tures contracts traded 85 cents per cwt. below the average on January 5, with prices for February through March down nearly $2 per cwt. compared to a month ago. He reported that the WASDE indicates the trend could continue and cited the rising milk production data and lowered milk price projections detailed above and warned that; “If lower milk prices aren’t enough incentive for dairy farmers to reduce milk production, higher feed costs might be.” USDA forecasts the season-average corn price to be 60 cents to $1.40 per bushel higher than the year before, and soybean prices up to $1 per bushel higher. Higher beef prices might be an incentive to more culling, Natzke said. Latest USDA projections raised beef prices by $6-$14 per cwt. compared to last year. Cooperatives Working Together (CWT) accepted 35 requests for export assistance this week to sell a total of 3.763 million pounds of Cheddar cheese and 3.411 million pounds of butter to customers in Asia, Europe, the Middle East and North Africa. The product will be delivered through June 2012.The sales raised CWT’s 2012 cheese exports to 17 million pounds plus 14.4
February 20, 2012 • COUNTRY FOLKS West • Section D - Page 11
million pounds of butter to 14 countries. Looking “back to the futures;” the Class III milk price average for the first six months of 2012 stood at $17.60 on January 6, $17.28 on January 13, $16.81 on January 20, $16.85 on January 27, $16.35 on February 3, and was hovering around $16.15 late morning February 10. Meanwhile; the Livestock Gross Margin insurance program (LGM) has been a “very workable way for dairy producers to set some minimum floors on their revenue,” according to the University of Wisconsin’s Dr. Brian Gould in Tuesday’s DairyLine but is severely limited by a budget of just $20 million a year for all of the pilot livestock revenue programs, including the LGM. Gould said the Congressional Budget Office 10 year forecast of direct payments to agriculture is about $60 billion, with $22 billion going to corn producers and $11 billion to wheat. $443 million would go to dairy or less than 0 .3 percent. He predicted continued volatility in dairy but said the LGM program works however it may need to be removed from “pilot status,” so more funds could become available for the LGM. The LGM ran out of money after two months, Gould reported, but he speculated that about 2 1/2 percent of U.S. annual milk production was insured and was equivalent to what’s sold on the Class III futures. The relative small amount of milk represented is only because of the lack of money, according to Gould. Gould encouraged listeners to be involved in the hearing process as the Farm Bill process moves ahead and to contact lawmakers. He said there are groups of dairy farmers that are examining changes that could be made to the LGM to make it more workable and get it out of pilot status and now is the time to do it.