#Dairy Market Review: #USDA projects lower prices in 2015

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Milk production in the Central region has effectively moved into spring flush with milk receipts increasing noticeably during the past week or so.

Field work and forage growth is slow primarily in the upper Midwest, but warmer weather is here and cows are responding. Milk is moving around at a price range of $3.00 under class to as much as $1.75 over class.

This is a wide price range and varies according to location and competition. It is evident that milk supply is increasing as more milk is available to those who want it.

Cheese production is increasing allowing for demand to be met as well as moving some to inventory. Dry whey supply is more abundant resulting in price weakness. Some end users have found alternatives for whey due to high price reducing demand slightly. In the Northeast region of the country, manufacturing milk supply is termed as heavy.

For the week ending May 9, Cheddar blocks declined 2.50 cents to $2.0450 with 15 loads traded. Barrels declined 3.50 to $2.02 with seven loads traded. Butter jumped 9.25 cents to $2.1675 with four loads traded. Grade A nonfat dry milk gained 0.25 cents to $1.78 with three loads traded.

Milk production raised

U.S. Department of Agriculture (USDA) projects 2015 milk production to reach 212.1 billion pounds, up 6.0 billion pounds or 2.9 percent higher than the projection for this year according to the recent World Agricultural Supply and Demand report.

Production was left unchanged for 2014 at 206.1 billion pounds. Milk prices this year were raised slightly. Class III price was raised 5 cents to an average of $20.70, Class IV price was raised 10 cents to $21.45, and the All-milk price was raised 5 cents to $22.85.

They reduced prices for 2015 with an expectation of a Class III average of $17.40, a Class IV average of $19.10, and an All-milk price of $20.20. USDA left cheese price this year at $2.01, unchanged from their April estimate. The average estimate next year is $1.72.

If realized, this would be lower than the average price of 2013. Dry whey price this year was raised a penny to 64.0 cents per pound while it was reduced next year to 56.50 cents, which would be below the average price of 2012.

USDA projects butter price to average $1.83 this year, up 3 cents from the April estimate while they estimate the average price for 2015 at $1.68. Nonfat dry milk price was reduced 0.50 cent this year to $1.8450 with an estimate next year of $1.64.

GDT declines again

All eyes were on the Global Dairy Trade auction as the industry is being affected by what happens in the global market. Prices were mixed in the categories, but the overall trade weighted average declined 1.1 percent.

Whole Milk Powder price declined 1.7 percent to $3,928mt or $1.78 per pound. Skim Milk Powder declined 2.3 percent to $3,875mt or $1.76 per pound. Anhydrous Milk Fat increased 2.4 percent to $4,170mt or $2.14 per pound. Butter increased 1.6 percent to $3,8982mt or $1.77 per pound.

Cheddar cheese price declined 1.8 percent to $4,195mt or $1.90 per pound. Buttermilk Powder declined 1.2 percent to $3,713mt or $1.68 with Rennet Casein up 6.8 percent to $11,363mt or $5.15 per pound.

AMS prices

For the week ending May 3, Agricultural Marketing Service (AMS) prices were mostly higher. Prices for 40-pound cheddar blocks decreased 4.6 cents to $2.25.

The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $2.26, up 0.6 cents. USDA grade AA butter averaged $1.90 for the week, up 4.1 cents. Nonfat dry milk averaged $1.95, down 6.7 cents. Dry whey averaged 67.5 cents, down 1.2 cents.

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in commodity trading that may not be suitable for recipients of this publication.

Source: Agri-View

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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