#Dairy market review: June milk production plus 1.5 percent

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The start of the week was uneventful beginning with lower cheese price and higher butter price; however, the rest of the week showed improved buyer interest resulting in higher cash prices. Much of this strength was attributed to hot weather that spread across much of the country. Traders turned more bullish on the perception that hot weather would tighten milk supply to the extent that manufacturers would be dealing with a deficit supply. Milk was already not overly abundant, but yet sufficient for demand. Little extra milk has been available to the market with reports of extra spot loads of milk commanding up to $2.00 over class in the Central region as manufacturers would like to keep plants full and customers satisfied. It is unclear yet as to how much impact hot weather had on milk output during the week, but some estimates were floating around of production down around 10 to 12 percent. For the week, Cheddar blocks increased 7.25 cents to close at $1.7475. Barrels gained 9 cents to end at $1.74. Barrels price slowly gained on blocks narrowing the spread again with the potential for price to invert with barrels higher than blocks. Butter price did not move quite as much with price at $1.49, up 3 cents. This lagging of butter price does keep some caution in the market as many times butter price indicates cheese prices strength or weakness. During the week there were 13 loads of blocks, 18 loads of barrels, and 4 loads of butter traded on the exchange. The August Class I price was announced at $18.88, down 3 cents from July.

GDT auction up 4.9 percent

Some support for milk futures came from a higher Global Dairy Trade auction trade weighted average. The trade weighted average increased 4.9 percent from the previous event. Whole Milk Powder price increased 7.7 percent to $5,058 mt or $2.29 per pound. Skim Milk Powder price increased 3.3 percent to $4,566 mt or $2.07 per pound. Anhydrous Milk Fat price increased 3.6 percent to $4,742 mt or $2.15 per pound. Buttermilk Powder price gained 4.8 percent to $4,826 mt or $2.19 per pound with Cheddar Cheese price up 2.1 percent to $4,475 mt or $2.03 per pound. Butter price showed the only decrease with price declining 0.3 percent to $3,693 mt or $1.68 per pound.

Milk production higher than expected

U.S. milk production in June rose 1.5 percent with second quarter production up 0.9 percent from the same period last year. Production was stronger than anticipated with the greatest growth in year-over-year production so far in 2013. USDA reported June production in the top 23 states up 1.6 percent from the previous year. There were just two states of the top 23 states that showed production declines. Those declines were seen in Missouri, down 4.2 percent and California, down 0.8 percent. This certainly is incredible considering the drought situation in the Western half of the country. The greatest percentage gain in milk production took place in Kansas with an increase of 9.4 percent. Indiana production increased 5.8 percent, Iowa was up 4.4 percent, Colorado increased 4.1 percent, and Florida was 4.0 percent higher. Other states showed gains of less than 4.0 percent. The state of New Mexico has been and is in a severe drought, but yet was able to increase milk production 1.2 percent compared with last year.

AMS prices

For the week ending July 13, Agricultural Marketing Service (AMS) prices were mixed. Prices for 40-pound cheddar blocks decreased 1.5 cents to $1.71. The price for 500-pound barrels, adjusted to 38 percent moisture, averaged $1.69, down 2.4 cents. USDA grade AA butter averaged $1.52 for the week, up 5.3 cents. Nonfat dry milk averaged $1.72, up 1.3 cents. Dry whey averaged 57.4 cents, down 0.9 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 may not be suitable for recipients of this publication.

Source: Agriview

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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