After falling steadily since early February, cheese prices have stabilized around $1.55 a pound in April.
The biggest news about exports is the Canadian policy affecting imports of ultrafiltered milk from the United States.
This action, stopping a recent surge of exports from Midwestern producers, got a response from President Donald Trump and many others.
Of course, Canada has a long-standing protection program for drinking milk, and ultrafiltered milk, as a new product, was not covered by existing policy.
The dollar is still strong and gained value relative to the New Zealand and Aussie dollars, while weakening slightly against the euro.
These changes hurt our competitiveness against the euro and help our competitiveness against Australia and New Zealand.
Cheese prices fell 0.6 percent in March, skim-milk powder gained 1.2 percent, and butter fell 2.1 percent.
Dry whey prices rose 3.6 percent. Exports of dry products have been stronger, with Mexico being a particularly strong buyer.
Milk production is seasonally dropping in New Zealand, although it was up in February somewhat. Europe, in response to the continuing low milk prices after the disappearance of the quota program, has been producing well below year-earlier amounts, although that gap is narrowing.
Skim milk powder prices began April a bit off, but rose later in the month by 2.5 cents.
Class III and Class IV futures prices for most of 2017 are expected to be higher than they were in 2016.
My estimated average for the Pennsylvania all-milk price for 2017 is $1.66 higher than the 2016 average.
The latest Drought Monitor shows moderate drought for dairy producing areas in the Susquehanna Valley and parts of New England. Otherwise, conditions in the remaining dairy-producing areas are normal.
The long-term issues depressing dairy prices are still the strong dollar, the continuing Russian embargo on dairy imports from the EU, and problems in the Middle East.
Overall, the outlook for milk prices for 2017 is better than 2016, almost the same as it was a few weeks ago.
Feed prices will remain low, so dairy profitability this year should be better than in 2016. Corn and soybean meal prices are lower than last month, but only slightly.
The South American corn and soybean crops are very good, and world inventories are very high. U.S. exports of corn and beans are very large, the most in a decade for corn and the most ever for beans.
There is no reason to expect corn and soybean meal prices to increase, given the large inventories worldwide if 2017 crops are good. Some corn acreage will go to beans this year, given the relative prices.
Income Over Feed Costs
Penn State’s measure of income over feed costs fell by 7.1 percent in April from its March value. The change is because the milk price has fallen. The two month’s feed costs were identical.
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 feed costs are paid. Like income over feed costs, this measure shows that the April milk margin in Pennsylvania was 7.1 percent lower than in March.
The Pennsylvania drought continues, with the southeastern part of the state having moderate drought.
The latest U.S. milk production report showed March milk production up 1.6 percent from a year earlier. This milk production increase is about twice U.S. population growth rate.
Unfortunately, the other dairy exporters are increasing milk production as well. Milk production in Pennsylvania in February was 2.4 percent over its 2016 level.
Finding markets for all this milk will be a challenge. Cow numbers grew by 0.16 percent from February and increased by 0.57 percent over March of 2016.
Although this increase in cows is very small, when combined with the strong dollar that is depressing dairy exports, the growth nationally in milk production will limit milk prices.
Source: Lancaster Farming
Link: http://www.lancasterfarming.com/farm_life/family/milk-prices-fall-feed-costs-remain-low/article_fd0b3f7a-9060-5098-b3eb-a8eac865b1bc.html