Monthly Dairy Prices 10-12-09
The last week of September/first two days of October was a big news week for dairy as well as the week of World Dairy Expo which I attended and enjoyed so very much.
First, a U.S. House-Senate Conference Committee agreed to a plan to spend $350 million to help cash strapped dairy farmers – $60 million will go toward dairy product purchases, primarily cheese, for government feeding programs and $290 million will be made as direct payments to producers. Details have to be worked out yet, Congress must approve the legislation, and the President sign it.
Then came the announcement of a third herd retirement program for 2009 by Cooperatives Working Together (CWT). Bids will be accepted through October 15, 2009. The maximum bid again is $5.25 per hundredweight with bids paid in two installments, 90 percent up front and 10 percent, plus interest, if the producer and his farm stays out of dairying for a year.
The September Federal order Class III milk price was announced Friday at $12.11 per hundredweight (cwt.), up 91 cents from August, $4.17 below September 2008, and 71 cents above the comparable California 4b price. The Federal order Class IV price is $11.15, up 77 cents from August, but $4.30 below a year ago.
What a difference a year makes. The 2009 Class III average now stands at $10.49, down from $17.93 a year ago, and compares to $17.55 in 2007.
The October Class III futures contract settled Friday at $12.80. November settled at $13.96 and December at $14.44. That would portend a 2009 average of $11.30, down from $17.44 in 2008 and $18.04 in 2007.
The NASS surveyed cheese price averaged $1.3522 per pound, up 9.2 cents from August. Butter averaged $1.1811, down 2.2 cents. Nonfat dry milk averaged 96.64 cents, up a dime, and dry whey averaged 29.79 cents, up fractionally.
California’s September 4b cheese milk price is $11.40 per cwt., up 11 cents from August, and $5.23 below September 2008. The 4a butter/powder price is $11.08, up 87 cents from August, but $4.43 below a year ago.
Cash cheese prices moved a little higher the week of September 28 but uncertainty over what the government was going to do likely kept traders from venturing out very far.
The 40-pound blocks closed Friday at $1.4350 per pound, up 2 1/4-cents on the week, but 37 1/2-cents below that week a year ago when the blocks fell 13 cents to $1.81. The 500-pound barrels closed Friday at $1.42, up 4 1/4-cents on the week, but 37 1/4-cents below a year ago. Twelve cars of block traded hands on the week and four of barrel. The lagging NASS-surveyed U.S. average block price slipped 2.2 cents, to $1.3135. Barrel averaged $1.3046, up a penny.
Butter closed Friday at $1.2350, down 2 1/2-cents on the week and 51 cents below a year ago. Only three cars were sold on the week. NASS butter averaged $1.2076, up 3 cents.
Cash Grade A nonfat dry milk closed at $1.18, up 11 1/2-cents on the week, and Extra Grade closed at $1.15, up 14 cents. NASS powder averaged 97.78 cents per pound, down 0.7 cent. NASS whey averaged 30.26 cents,
up 0.1 cent.
A slowdown in milk production is leading to the recovery of milk prices, according to Bob Cropp, Professor Emeritus at the University of Wisconsin-Madison, who called the recovery a slow process in Tuesday’s DairyLine.
“With a loss in the export market, particularly in powder and of course cheese and butter, with butter being way down, we’ve had to get milk production down,” Cropp said. He pointed out that August output was only down 0.2 percent but he believes that some of the strength in the market “might be just the fact that milk production is down seasonally and fluid sales are up a little bit.”
Cropp remains optimistic that the Federal Order Class III price will rise to around $14.00 by the end of the year. He believes the market is going to be stronger than what some believe and said, “I think the futures are a little pessimistic in the long term. Production coming down and cow numbers declining, there will be some signs of improvement.”
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