Lee Mielke: Monthly Dairy Prices 8-13-12
August 22, 2012
Farm milk prices continue to climb. The Agriculture Department announced the July Federal order Class III benchmark at $16.68 per hundredweight (cwt.), up $1.05 from June, still $4.71 below July 2011, and equates to about $1.43 per gallon. That raised the 2012 Class III average to $16.01, down from $17.68 at this time a year ago and compares to $13.60 in 2010 and $10.16 in 2009.
Class III futures settled Friday as follows: $17.49 for August; $18.77 for September; $19.20, October; $19.36, November; and $19.20 for December. The July Class IV price is $14.45, up $1.21 from June and $5.88 below a year ago.
The AMS-surveyed cheese price averaged $1.6857 per pound, up 10.1 cents from June. Butter averaged $1.5386, up 14 cents. Nonfat dry milk averaged $1.1744, up 7.2 cents, and dry whey averaged 50.23 cents, up fractionally.
California's July 4b cheese milk price is $15.18, up 53 cents from June, $4.17 below a year ago, and $1.50 below the comparable Federal order Class III price. The July 4a butter-powder price is $13.50, up 33 cents from June and $6.57 below a year ago. The 2012 4b price average now stands at $14.02, down from $16.20 at this time a year ago and compares to $12.44 in 2010. The 4a average is $14.55, down from $19.10 a year ago and compares to $13.96 in 2010.
Dairy farmers continue to evaluate herd size, feed on hand, input needs, and other variables as widespread drought impacts crops, pasture and forage acreage. The drought categories of extreme and exceptional, as noted in the U.S. Drought Monitor report, has been expanded and is at the highest level since 2003. As a stopgap measure for finding livestock feed, some acreage enrolled in Conservation Reserve and Wetland Reserve programs is now eligible for haying and livestock grazing on a short term basis.
The Daily Dairy Report (DDR) Sarina Sharp reported in the DDR's Daily Dairy Discussion on its website that Congress was under pressure to pass a farm bill as the severity of widespread drought increases. Several disaster assistance programs for livestock producers in the 2008 farm bill expired last year, she said, and House leaders were crafting interim legislation to offer drought aid and delay any farm bill fight until after the election. She warned that, without a new bill or interim legislation, provisions in the current farm bill, including the support price and MILC payments, would expire September 30.
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When the dust settled, Agriculture Secretary Tom Vilsack announced two new pieces of disaster assistance for farmers, according to Dairy Profit Weekly (DPW) Emergency haying and grazing was expanded to approximately 3.8 million acres of conservation land to bring greater relief to livestock producers dealing with shortages of hay and pastureland and crop insurance companies have agreed to provide a 30-day short grace period for farmers on insurance premiums in 2012.
DPW also reported that House Republican leaders, avoiding floor debate on the House Ag Committee's 2012 Farm Bill proposal and giving up on trying to extend the 2008 Farm Bill for one year, pushed through a $383 million disaster aid package for U.S. livestock producers. H.R. 6233, the "Agricultural Disaster Assistance Act of 2012," passed by a vote of 223-197 but Senate Democratic leaders said that chamber would not take up the House disaster relief bill before leaving for an August recess, and might not address it when they return after Labor Day, because they want the disaster relief rolled into the 2012 Farm Bill.
Checking the markets; cash block cheese closed the first Friday of August at $1.71 per pound, up a half-cent on the week but 42-1/4-cents below a year ago. Barrel closed at $1.6850, unchanged on the week and 45 cents below a year ago. Six cars of block found new homes on the week and 20 of barrel. The AMS-surveyed U.S. average block price hit $1.6765, up 2.8 cents, while the barrels averaged $1.7180, also up 2.8 cents.
Cheese production was reported slower the last week of July as reduced volumes of milk were available, according to Dairy Market News. The hot weather across much of the country has contributed to lower component levels in milk along with reduced volumes. Demand for cheese remains good with some increased interest to build inventories ahead of expected price increases.
Cash butter closed Friday at $1.69, up 2 cents on the week and 41-1/4-cents below a year ago. Eight cars sold on the week. AMS butter averaged $1.5689, up 2.1 cents. Cash Grade A and Extra Grade nonfat dry milk closed at $1.40 each, up 2-1/2 and 10-cents respectively. AMS powder averaged $1.2014, up 2 1/2-cents, and dry whey averaged 50.97 cents, unchanged from a week ago.
Churning across the country is trending lower, as Class II operations continue to absorb steady to increasing levels of cream. The overall cream supply is lighter as milk production and butterfat tests decline. Butter production is focused on filling current orders with little added to inventory, according to USDA. Butter producers are often reaching into inventoried stock to fill demand.
Butter demand is seasonally steady. The National Dairy Retail Report indicated that ads across the country reflected butter prices ranging $1.49- $3.49 per pound. Food service orders are steady. Some food service and restaurant buyers are indicating that hot temperatures may be slowing away from home eating patterns, but for the most part, restaurant traffic is holding up quite well. ❖