Cheese, Whey Prices Up; Butter, Milk Powder Down

The Class III milk price in August was $1.67 higher than in July, while the Class IV price was down 19 cents. By Jim Dunn
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Exporting butter in this market will be a challenge.
With the continuing drought and extreme heat, California’s milk production continues to lag behind a year ago. But nationwide, milk production in July was up by 1.4 percent over last July.
Since last month, the euro has recovered 1.5 percent relative to the greenback while the Australian dollar is up by 0.9 percent and the New Zealand dollar is up by 4.2 percent.
In total, these changes in currency values improve U.S. competitiveness in export markets.
Nevertheless dairy exports are far below 2014 levels and somewhat below 2015, although improving despite the strong dollar.
Cheese futures prices have fallen by 1.7 percent in the last month for 2016 contracts. Butter futures have fallen about 15 cents per pound in recent weeks, giving back increases from a month ago.
World inventories are high and the dollar is still expensive relative to other exporters’ currencies. China should be importing more, given their milk production, but this increase is slow to arrive.
Class III milk prices, and to a lesser extent Class IV, are expected to be higher over the remainder of the year with the futures prices this fall are about the same as for the first half of 2017.
My estimates for the Pennsylvania all-milk price for the rest of the year average $3 per hundredweight more than for January through July.
In much of Pennsylvania and especially upstate New York, the latest Drought Monitor shows the drought is continuing.
Although it is hard to generalize from individual farm results, early harvest in much of Pennsylvania are disappointing for hay and corn silage, which will hurt net dairy income.
Besides the Northeast and the continuing extreme drought in California, the nation’s crop weather is generally OK.
The long-term issues depressing the dairy economy are still the strong dollar, the Russian embargo on EU dairy imports and China’s economy.
Overall, the outlook for milk prices for the rest of the year and first half of 2017 is much better than prices during the first half of 2016.
Corn prices are down 2.5 percent in the past month, and soybean and soybean meal prices are both down 6.6 percent.
The U.S. corn and soybean crops will be records as Corn Belt weather has been almost ideal. Exports of corn and beans are lagging estimates, undoubtedly reflecting the strong dollar.
Income Over Feed Costs
Penn State’s measure of income over feed costs rose by 24 percent in August from July, as much higher milk prices combined with somewhat lower feed prices.
August’s income over feed costs is the highest since November 2014.
Income over feed costs reflects daily gross milk income less feed costs for an average cow producing 65 pounds of milk per day.
The milk margin is the estimated amount of the Pennsylvania all-milk price that remains after the feed costs are paid.
Like income over feed cost, this measure shows that the August Pennsylvania milk margin was 24 percent higher than in July.
For both measures, the estimated price may be overly optimistic, but in any case the profitability of dairy production in Pennsylvania is improving.
If the Pennsylvania drought hits farmers hard, which it will for some, then the feed costs using market prices will understate the impact as farmers spent money to produce feed and then must spend more money to replace crops lost to drought.
The latest U.S. milk production report showed July milk production up 1.4 percent from a year earlier.
Although not a large increase, this growing milk production is problematic in the current dairy environment, since the export market is tight, given the strong dollar, and there is plenty of milk available from other exporters with weaker currencies.
Cow numbers increased by only 0.19 percent over last year. Although this increase is very small, more milk production will limit higher milk prices.
 
Source: LancasterFarming
Link: http://www.lancasterfarming.com/farming/dairy/cheese-whey-prices-up-butter-milk-powder-down/article_0b6b47b3-79df-58b1-a753-55be44e0e9c2.html
 

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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