Page 18 - Section A • COUNTRY FOLKS New England • December 19, 2011
“DAIRY” CHRISTMAS EVERYONE Issued Dec. 9, 2011 The Agriculture Department’s latest milk production estimate for 2011 and 2012 was unchanged from last month’s World Agricultural Supply and Demand Estimates report. Commercial exports were forecast higher for 2011. Look for 2011 milk output to hit 195.9 billion pounds, up from 192.8 billion in 2010 and 189.3 billion in 2009. The 2012 projection is 198.4 billion pounds. Cheese, butter, and whey prices were forecast higher for 2011 and 2012, but the nonfat dry milk (NDM) forecast was reduced for 2011 and unchanged for 2012. Class III milk prices were raised for 2011 and 2012 on the increased price forecast for cheese and whey. The Class III is expected to average $18.30-$18.40 per hundredweight, up 15 cents from last month’s estimate, and compares to $14.41 in 2010 and $11.36 in 2009. The average takes a drop in 2012 however to $16.70$17.60, down 40 cents from last month’s projection. The Class IV price was unchanged for 2011 as the higher butter price is mostly offset by a lower NDM price forecast. That range is $19.05-$19.25, up from $15.09 in 2010 and $10.89 in 2009. However, for 2012 with an unchanged NDM price forecast, the Class IV price forecast was raised from last month due to higher butter prices. The 2012 average is now projected at $16.40-$17.40, which is a dime higher than what bean counters projected last month. Meanwhile; cash cheese prices fell for the fourth consecutive week at the Chicago Mercantile Exchange. The cash block price closed the second Friday of December at $1.6550 per pound, down 8 1/2cents on the week but still 26 1/2- cents above that week a year ago when they plunged 11 3/4-cents. The blocks have lost 29 1/2-cents in the last four weeks and you’ll recall that a penny movement on the cheese
price approximates to a dime on the milk price. The barrel price closed Friday at $1.5725, down 14 cents on the week, 22 1/2- cents above a year ago when the barrels rolled 11 1/4 cents lower, and is now 8 1/4 below the blocks so, either the barrels will have to move higher or the blocks head lower to reestablish the more typical 3 cent spread. There were only four cars of block that were sold this week but 39 of barrel. The NASS-surveyed U.S. average block price slipped to $1.8807, down 0.8 cent, while the barrels averaged $1.9127, down 6.2 cents. FC Stone dairy broker Boris Maslovsky warned in his December 5 eDairy Insider Opening Bell that “Cheese buyers are still out there but the holiday buying season is winding down.” eDairy economist Bill Brooks added that “dwindling margins for butter and powder plants have probably shifted some milk into cheese vats.” “Butter demand is likely filling pipelines following holiday buying,” he said. “Butter has to be in distribution centers by now or on its way to stores.” USDA’s Dairy Market News said that “Cheese interest is light though lower prices may stimulate extra late year promotions.” It reported that a number of packagers needed overtime, to make up for the Thanksgiving holiday reduced schedules. Process interest is about steady at lighter seasonal levels. Cheese production was heavier over the Thanksgiving weekend and back to regular schedules following. Cheese yields remain at solid seasonal levels, according to USDA. Butter ended the week at $1.64, up a penny and 2 cents above a year ago. Volume was half that of the previous week with 25 cars trading hands. NASS butter averaged $1.6284, down 1.8 cents. NASS nonfat dry milk averaged $1.4422, up 3.2 cents, and dry whey averaged 64.7 cents, up 0.4 cent. Dairy analyst Jerry Dryer gave some insight into the butter situation in his December 2 Dairy
and Food Market Analyst, stating; “Tis the season for the butter price to plunge; however, one or more manufacturers and/or marketers aren’t ready to let it plunge. They want to protect inventory values, selling prices or both until all holiday orders are filled.” Dryer added that “two manufacturers reportedly had a supply agreement or have a supply agreement that is about to expire, so the buyer or the seller or both needed to come to the market and thirdly cream supplies may be just tight enough to put the squeeze on the available butter supply and force some to scramble for enough last minute butter to fill holiday orders.” He warned however, that “the butter price is about to correct lower. Holiday orders will be shipped within the next week to 10 days,” but added a couple other thoughts. One, October butter production was at a record 146 million pounds or 20 percent more than any previous October in recent history. He also points out that October 31 butter Inventories stood at 130 million pounds versus a five year average of 160 million and said international buyers are “kicking tires and will likely place orders once the U.S butter price gets to $1.50 or less.” Commercial disappearance of butter has been very strong, he said. USDA confirms that, reporting that dairy
product commercial disappearance in the first nine months of 2011 totaled 147.4 billion pounds, up 1.1 percent from the same period in 2010. Butter was up an impressive 9.9 percent; American cheese, up 0.6 percent; other cheese
was up 4 1/2 percent; nonfat dry milk, down 3.4 percent; and fluid milk products, were off 1 1/2 percent. FC Stone dairy economist Bill Brooks said in Tuesday’s DairyLine that October butter output was the highest since
records were kept and he’s a bit surprised that the price hasn’t fallen much considering the huge volume that was traded the week of November 28. He warned however that, if the price
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