MARKET WATCHMARKET WATCH FEED - Progressive Dairy
Transcript of MARKET WATCHMARKET WATCH FEED - Progressive Dairy
Farm production costs have increased in the last quarter of 2010, with all indicators pointing to higher input prices for 2011. Increases are driven primarily by fuel and feed prices. Diesel fuel has increased by 24 percent in the fi rst 11 months of 2010, compared to the same time period in 2009. Looking ahead at 2011, diesel fuel is expected to be up another 8 percent over 2010. Much of this is driven by higher crude prices combined with higher refi ner margins, and ultimately by increased global demand for petroleum products.
Crude oil is expected to fi nish up 28 percent for 2010 over 2009; and be up another 9 percent in 2011. Fertilizer is also expected to be up in
MARKET WATCHMARKET WATCH PRoduction costs expected to rise IOFC falls for second straight monthFEED
Joanna SamuelsonDirector of Farm Credit East’s KnowledgeExchange Program
Soybean meal* ($/ton)
Jan. 3 Price 3-week change
CA $424 $27
ID $424 $27
WI $390 $31
*Price quotes contributed by Western Milling, J.D. Heiskell and United Cooperative.
Corn* (in tons) (in bushels)
Jan. 3 Price 3-week change
CA $267 $15
ID $268 $12
WI $220 $27
Price 3-week change
$7.48 .42¢
$7.50 .33¢
$6.16 .76¢
COMMODITIES
Cottonseed* ($/ton)
Jan. 3 Price 3-week change
CA $304 $2
ID $321 $1
WI $290 $5
price in 2011, potentially as high as 15 percent.
Feed, up 22 percent in November from a low in April 2010, should not be a surprise given the volatility in the commodity markets this year. While the damage has largely been done, there is some minor relief for Eastern states particularly, given their proximity to Canada. Record
Canadian corn production has increased U.S. import prospects, with some nearby feed companies able to source directly from Canada. Nationally, prices are still expected to be up by about 46 percent for the 2010 crop.
Soybean prices are expected to be up 19 percent for the 2010 crop, with soybean meal prices projected
July2000
July2001
July2002
July2003
July2004
July2005
July2006
July2007
July2008
July2009
July2010
80
100
120
140
160
180
1999
= 1
00
Index of farm production costs Source: Farm Credit East
to increase 6 percent. Strict cost control, focusing on effi ciency and use of alternative feedstuff s are strategies to consider. Additionally, producers who have extra 2010 grain crop from corn and soybeans will benefi t from the ability to better control their own feed costs and/or perhaps sell some crop on the cash market. PD
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8 Progressive Dairyman Issue 2 • January 20, 2011
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Booth DS143
Supreme hay ($/ton)
Dec. 14 Price 3-week change
Central CA $210-$215 $5 UT $100-$125 NC
NV $160-$170 $10-$20
WA/OR $160-$170 $20
CO $135-$150 $15 NM $185-$190 NC
TX $185-$205 $5-$10
Source: USDA National Hay, Feed & Seed Summary
Mar2011
May July Sept Dec Mar2012
Low
High
Settle$5.25
$5.50
$5.75
$6.00
$6.25
$6.50
Jan2011
MayMar July Sept OctAug Dec Jan2012
Low
High
Settle$300
$320
$340
$360
$380
$400
The chart above displays the amount of income a U.S. producer would have remaining after paying for feed to produce one hundredweight of fl uid milk at the current all-milk price.
REGION
GAS DIESEL
Recent 3-week change
Yearly change Recent 3-week Yearly
change
East Coast $3.082 +.073¢ +0.429¢ $3.357 +.109¢ +0.530¢
Midwest $3.064 +.132¢ +0.427¢ $3.303 +.098¢ +0.532¢
Gulf Coast $2.923 +.097¢ +0.398¢ $3.279 +.116¢ +0.529¢
West $3.112 +.034¢ +0.363¢ $3.443 +.082¢ +0.535¢
California $3.308 +.058¢ +0.321¢ $3.507 +.104¢ +0.548¢
U.S. $3.07 +.09¢ +0.405¢ $3.331 +.01¢ +0.534¢
Feb2011
MayAprMar FebJune July Sept Oct NovAug Dec Jan2012
Settle$90
$91
$92
$93
$94
Prices used to calculate ratioCommodity Current Change
Corn (bu) $4.94 .39¢ Soybeans (bu) $11.70 .60¢ Baled hay (ton) $121 $4.00 All-milk (cwt) $16.80 $1.10 Source: USDA NASS Agricultural Prices report Dec. 2010
PRoduction costs expected to rise IOFC falls for second straight month
FUTURES
ENERGY
High: $6.42 Low: $5.27
High: $376.10 Low: $305.70
High: $93.36 Low: $90.19
Corn (dollars per bushel)
Soybeans (dollars per ton)
Crude oil (dollars per barrel)
Jan2010
Feb Mar Apr May June July Aug Sept Oct Nov Dec1,737
2009
$3$4$5$6$7$8$9
$10$11
Dec 31, 2010: $8.27 High: $10.79 Low: $3.51Income over feed cost (per cwt)
CornMarch ’11 contracts $6.08 .41¢ $6.30/$5.80May ’11 contracts $6.16 .41¢ $6.39/$5.88
DEC. 14 Avg. 3-week settle High/Low
Soybean mealJan. ’11 contracts $357.58 $14.19 $372/$340.70
March ’11 contracts $361.20 $15.64 $375.20/$343.40
The December index is 207, up 6.7 percent from last month and 34 percent above a year ago. The corn price, at $4.94 per bushel, is up 39 cents from last month and $1.34 above December 2009. The all-hay price, at $112 per ton, is up $1 from November and up $7 from last December. Sorghum grain, at $9.17 per cwt, is 73 cents above November and $3.46 above December last year.
Source: USDA NASS Agricultural Prices report Dec. 2010
Source: Chicago Mercantile Exchange data
Source: U.S. Energy Information Administration
Issue 2 • January 20, 2011 Progressive Dairyman 9
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According to the December 23rd USDA Livestock Monthly Slaughter Report, dairy cow slaughter was 241,000 head for November, which was up 10,000 head from the previous month of October
MARKET WATCHMARKET WATCH Cull CoW PRICES DIP IN NOVEMBERMARKET WATCHCATTLE
Chris LehnerDirector of commoditiesEquity Cooperative Livestock Sales Association
at 231,000 cows. Compared to November 2009, dairy cow slaughter for November 2010 climbed over 13% higher. For November 2010 it represents 8.5% of the total number of all cows slaughtered. � e week
ending November 13th had the largest single-week slaughter for the year at 60,700 cows.
Dairy cow prices dipped in November. � e average U.S. dairy cow slaughter price for November was $51.90/cwt, off .80/cwt from the October price of $52.70/cwt. However, 2010 brought much higher
prices for cows compared to 2009. For November 2009 dairy cow prices in the U.S. averaged $41.70/cwt, $10.20/cwt lower compared to November 2010.
Mammoth Cave Dairy Auction, Inc.Smiths Grove, KY (800) 563-2131(sale 12/28/10)
$1,360 $90
$1,190 $60
$980 $30
$1,000 $50
$380$20
$525$195
$160$20
$115 $20
N/T
New Holland Sales StablesNew Holland, PA (717) 354-4341(sale 12/29/10)
$1,700 $75
$1,525 $50
$1,325 $75
N/T$700
$200 $1,000 $75
N/T N/T$875
$125
Mid-Georgia Livestock AuctionJackson, GA (770) 775-7314 (sale 12/14/10)
$1,650 NC
$1,575 NC
$1,250 NC
N/T$475 NC
$525 NC
$170 NC
$70 NC
N/T
Central Livestock AssociationAlbany, MN (800) 733-6828 (sale 12/17/10)
$1,525 $100
$1,200 $10
$1,175 $275
$1,150 NC
$133cwt $8
$120/cwt $20
N/T N/T$900
$100
Equity Co-op LivestockStratford, WI (715) 687-4101Rocky Olsen (608) 434-4037 (sale 12/28/10)
$1,300 $100
$1,100 $100
$1,100 $50
$1,050 $100
$550 NC
$825 $25
N/T N/T N/T
Topeka Livestock AuctionTopeka, IN (206) 593-2522 (sale 12/28/10)
$1,485 $135
$800 NC
N/T N/T$700
$200 $1,000 $350
$200 $150
N/T $935
United Producers, IncMarion, MI (517) 294-3484 (sale 12/17/10)
$1,575 $1,400 $1,000 $1,000 $400 $700 N/T N/T $975
Brush Livestock of ColoradoBrush, CO (970) 842-2801 (sale 12/12/10)
$1,460 NC
$1,450 NC
$1,290 NC
$1,310NC
N/T N/T$235
NC$135NC
$1050 NC
Chehalis Livestock MarketChehalis, WA (360) 748-3191 (sale 12/27/10)
$1,350 $50
$1,350 $160
$1,100 $25
N/T $521 N/T N/T$40
$35 N/T
Producers LivestockJerome, ID (208) 324-4345 (sale 12/22/10)
$1,450 $50
$1,300 $20
$1,240 $90
N/T N/T N/T N/T N/T $1,000
Smith� eld Livestock AuctionSmithfi eld, UT (435) 563-3259 (sale 12/16/10)
$1,310$225
$1,150 $100
$1,010 $10
$1,030 NC
$.80/CWT NC
$1.04/cwt NC
N/T N/T N/T
Sulphur Springs Livestock and Dairy AuctionSulphur Springs, TX (903) 885-7739(sale 12/16/10)
$1,400$25
$1,000 $50
$1,000 $300
N/T $400 NC
$650 $50
$185 $25
$65 $10
$1,050
Tulare County SalesDinuba, CA (559) 591-0884 (sale 12/21/10)
$1,500NC
$1,350$50
$1,250$25
$950$150
$550 $850$165$65
$50$10
$800NC
Contact Judy about being included in Progressive Dairyman’s Market Watch! [email protected] • (208) 324-7513 NC = No change N/T = No test Decrease in price Increase in price
Log on to www.progressivedairy.com to get auction reports from more locations!
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10 Progressive Dairyman Issue 2 • January 20, 2011
PD SOUTHWEST MAIN PC
NOTE: The colored bar represents cumulative year-to-date milk production. When it does not surpass the dotted line at the center of the box, it indicates state production is below the previous year’s total. When it does surpass the dotted line, it indicates production is above the previous year’s total.
MARKET WATCHMARKET WATCH NOV. PRODUCTiON UP 2.7% VS 2009MILK
Texas415 NC
1,750 +2.3%726 +2.8%
8,053 99.4%
Utah85 NC
1,720 -1.2%146 +1.4%
1,654 102.4%
Vermont138 NC
1,470 +0.7%203 +3.6%
2,310 102.1%
Virginia95 NC
1,440 -1.0%137 -0.7%
1,574 98.9%
Washington254 NC
1,875 +0.5%476 +6.0%
5,413 106.3%
Wisconsin1,265 +11,630 NC2,062 +0.5%
23,878 103.4%
Arizona182 -1
1,845 +0.3%336 +8.7%
3,784 101.1%
California1,750 +11,870 +5.4%3,273 +4.5%
37,021 102.2%
Colorado122 NC
1,905 +2.4%232 +7.4%
2,570 98.1%
Florida113 -1
1,370 +0.7%155 +0.7%
1,922 100.9%
Idaho572 NC
1,840 +2.8%1,052 +7.2%
11,711 105.2%
Illinois98 NC
1,550 +2.7%152 -0.7%
1,756 99.6%
Indiana169 NC
1,640 +1.9%277 +1.8%
3,166 102.1%
Iowa204 NC
1,700 +1.8%347 -3.3%
3,978 99.4%
Kansas121 NC
1,730 +0.3%209 +7.2%
2,284 100.0%
Michigan360 NC
1,830 +1.4%659 +3.1%
7,551 103.6%
Minnesota470 NC
1,520 -1.6%714 -1.5%
8,343 101.1%
Missouri96 -1
1,180 +0.9%113 -8.1%
1,328 92.2%
New Mexico319 +1
1,995 +1.3%636 +1.9%
7,221 99.4%
U.S. Total9,121 NC
1,696 +1.0%15,470 +2.7%
176,520 101.7%
New York611 NC
1,680 +4.7%1,026 +4.6%
11,644 102.1%
Ohio270 NC
1,560 +3.3%421 +1.7%
4,811 101.0%
Oregon121 NC
1,595 +2.2%193 +8.4%
2,175 105.4%
Pennsylvania541 NC
1,600 +2.6%866 +3.2%
9,842 101.7%
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12 Progressive Dairyman Issue 2 • January 20, 2011
According to the USDA’s report on November milk production, there were 30,000 more cows, 38 more pounds of total milk per cow and 400 million more pounds of milk compared to a year ago. � e increase amounted to 2.65 percent.
Compared to October, there was no change in number of cows, production per cow per day increased by 0.4 pounds, and total milk production per day increased by 3.8 million pounds. November marks the second month in a row where the monthly increase in total milk production over the previous year was lower than the reported increase from the month before. November was also the fi fth month out of the past six where the amount of milk produced was 400 million pounds or more greater than the year before.
� e six Western states closest to California were reported to be milking a total of 62,000 more cows than a year ago. California continues to be the only state in the West still milking fewer cows than at the same time last year. PD
California1,750 +11,870 +5.4%3,273 +4.5%
37,021 102.2%
Legend
Number of cows(in thousands)
Milk per cow(month)
(lbs.)Total milk
production (month)
(in millions of lbs.)
Year-to-date milkproduction (total)(in millions of lbs.)
Percentage of year-to-date production versus previous year-to-date
Monthly change(in thousands)
Annual percentchange
Annual percentchange
CA only Western state with fewer cows than at this point last year
John KaczorMarket analyst & Friday Report EditorMilk Producers Council (California)
95% 100% 105%
Jan2010
Feb Mar Apr May June July Aug Sept OctDec2009
Nov1,737
20092008
9,0009,0509,1009,1509,2009,2509,3009,3509,400
Nov. 2010: 9,121 High: 9,334 Low: 9,082
Milk cows (in thousands)
Jan2010
Feb Mar Apr May June July Aug Sept OctDec2009
Nov1,737
2009
20081,600
1,650
1,700
1,750
1,800
1,850 Nov. 2010: 1,696 High: 1,808 Low: 1,640Milk per cow (in pounds, 30-day equivalent )
Jan2010
Feb Mar Apr May June July Aug Sept OctDec2009
Dec1,737
20092008
14,500
15,000
15,500
16,000
16,500
17,000 Nov. 2010: 15,470High: 16,466 Low: 14,923Milk production (in pounds, 30-day equivalent)
U.S. HERD STATS
Nov. daily avg. milk per cow: 54.7 lbs.
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Issue 2 • January 20, 2011 Progressive Dairyman 13
Milk production continues to run well above year-ago levels. USDA’s recent monthly milk production report estimated U.S. milk production for the month of November up 2.7 percent from a year ago. � is level of milk production along with just modest growth in commercial disappearance has resulted in declining butter and cheese prices.
Butter sales were up 5.2 percent compared to a year ago from January through September. Other cheese sales, mainly Italian types, showed a strong 4.6 percent increase while sales of American cheese was up just 0.7 percent. Butter prices have weakened despite October 31st stocks being 43.3 percent lower than a year ago.
Cheese stocks remain rather high with October 31st stocks of American cheese 10.2 percent higher than a year ago and total cheese stocks 7.0 percent higher. October butter production was 7.5 percent higher than a year ago, cheddar cheese production 4.1 percent higher and total cheese production 3.5 percent higher. Holiday orders of butter and cheese have now been fi lled. With production higher and seasonal sales fi lled, prices of butter and cheese normally do decline during December and into January.
CME butter peaked at $2.235 per pound on October 1st, declined to $1.53 at the end of November, but has recovered some since. Cheddar barrels peaked at $1.735 per pound in early October, declined to $1.35 mid-November, recovered to $1.475 at the end of November, but have declined since. Similarly cheddar blocks peaked at $1.77 early October, declined to $1.40 on November 11th, recovered to $1.5075 early in December, but have also been sliding.
� e lower cheese prices have lowered the Class III price. Class III had peaked in October at $16.94, declined to $15.44 in November, and will be down to about $13.70 for December. Class III futures show further declines early in 2011, not reaching $14 until April and only peaking around $15.50 in October.
Nonfat dry milk prices have remained fi rm in the range of $1.20 to $1.23 per pound in the West, which has held up the Class IV price. But with lower butter prices, the Class IV price peaked at $17.15 in October, declined to $16.68 in November and will be about $15.15 for December. � e Class IV price may fall below $15 early in 2011, but recover and remain above $15 for most of 2011. � is means the
Mar Apr May June July Aug Sept Oct Nov DecFeb2008
Feb Mar Apr May June July Aug Sept Oct Nov DecJan2009
Feb Mar Apr May June July Aug Sept Oct Nov DecJan2010
Jan2011
CA Class 1 price
$8$10$12$14$16$18$20$22$24
MARKET WATCHMARKET WATCH Strong exports support cheese price Butter Rallying again??DAIRY PRICES
Bob CroppProfessor EmeritusUniversity of Wisconsin-Madison
Jan 2011: $15.20 High: $20.78 Low: $9.43Jan 2011: $16.72 High: $22.77 Low: $11.40 Fluid milk prices (in dollars)
Federal Class I price
14 Progressive Dairyman Issue 2 • January 20, 2011
Jan2009
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan2010
Feb Mar Apr May June July Aug Sept Oct Nov Dec
Futures2011
2012
$8
$10
$12
$14
$16
$18
Strong exports support cheese price Butter Rallying again??
Class III (in dollars)
12/12/0912/19/0912/26/09
1/2/10
1/9/101/16/101/23/101/30/10
2/6/10
2/13/102/20/102/27/10
3/6/10
3/13/103/20/103/27/10
4/3/10
4/10/104/17/104/24/10
5/1/10
5/8/105/15/105/22/105/29/10
6/5/10
6/12/106/19/106/26/10
7/3/10
7/10/107/17/107/24/107/31/10
8/7/10
8/14/108/21/108/28/10
9/4/10
9/11/109/18/109/25/10
10/2/10
10/9/1010/16/1010/23/1010/30/10
11/6/10
12/4/10
1/1/11
11/13/1011/20/1011/27/10
2008
2009
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50 Jan 1, 2011: $1.66 High: $2.24 Low: $1.10Butter (weekly average in dollars)
12/13/10
12/14/10
12/15/10
12/16/10
12/17/10
12/20/10
12/21/10
12/22/10
12/23/10
12/27/10
12/28/10
12/29/10
12/30/10
12/31/10
1/3/11
$1.60
$1.62
$1.64
$1.66
$1.68
$1.70Although butter prices on the CME have declined from their Oct. 1 peak of $2.235 per pound, prices on Nov. 18 were still at $1.93.
Dec2009
MayAprMarFeb NovJune July Sept OctAugJan2010
2008 2009
$0.750
$0.875
$1.000
$1.125
$1.250
$1.375
$1.500 Nov 2010: $1.30 High: $1.38 Low: $0.92 Non-fat dry milk12/12/0912/19/0912/26/09
1/9/10
1/9/101/16/101/23/101/30/10
2/6/10
2/13/102/20/102/27/10
3/6/10
3/13/103/20/103/27/10
4/3/10
4/10/104/17/104/24/10
5/1/10
5/8/105/15/105/22/105/29/10
6/5/10
6/12/106/19/106/26/10
7/3/10
7/10/107/17/107/24/107/31/10
8/7/10
8/14/108/21/108/28/10
9/4/10
9/11/109/18/109/25/10
10/2/10
10/9/1010/16/1010/23/1010/30/10
11/6/10
12/4/10
1/1/11
11/13/1011/20/1011/27/10
2009
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
12/13/10
12/14/10
12/15/10
12/16/10
12/17/10
12/20/10
12/21/10
12/22/10
12/23/10
12/27/10
12/28/10
12/29/10
12/30/10
12/31/10
1/3/11
$1.30
$1.31
$1.32
$1.33
$1.34
$1.35
Jan 1, 2011: $1.33 High: $1.77 Low: $1.06Cheese (weekly average in dollars)
American cheese sales have been fair, being up 0.6 percent from a year ago January through August. Sales of other cheese varieties (the majority of which is Italian varieties) doing much better with a 5 percent increase.
advanced Class IV price will likely be the mover of Class I prices most months during 2011.
Dairy product prices and milk prices would have fallen even more if it had not been for strong exports. Record exports of nonfat dry milk/skim milk powder were posted in October, up 69 percent from a year ago. Year-to-date exports were up 48 percent. (See page 18 for more detail.)
While dairy futures now show rather depressed Class III prices for the fi rst half of the year and only modest recovery for the second half, prices could show much better
improvement the second half. � e lower milk prices during the fi rst half along with much higher feed costs will result in unfavorable returns over feed costs. � is will likely result in heavier culling from the dairy herd and a reduction in the increase in milk per cow. � e inability to catch up on all expenses incurred and lost equity incurred during 2009 will likely increase exiting from dairying. � e slowdown in milk production, some anticipated improvement in domestic sales as well as lower but still good exports all point to a stronger price recovery second half of 2011. PD
Dec 2010: $13.83 High: $16.94 Low: $9.31
Issue 2 • January 20, 2011 Progressive Dairyman 15