As printed in our September 10, 2014 issue...
SPOT BUTTER PRICES POSTED A NEW RECORD at $2.82-1/4 per pound in late August trading on the CME. That price topped the September 1998 record. Butter inventories were off 42 percent from last July.
THE WIDENING GAP between U.S. and world butter prices could spark imports into America or a reduction in exports later this year. Recently, the U.S. has been exporting roughly 17 percent of its milk solids.
FUTURES MARKETS REMAINED RELATIVELY STRONG with Class III contracts averaging near $22.10 for September to December. February to July 2015 contracts have traded near $18 per cwt.
HIGHER PRICES HAVE SPURRED STRONG OUTPUT as July production was up 3.9 percent nationally compared to a year earlier. Among the top 23 states, only Oregon, Minnesota and New Mexico slowed milk flow.
WHILE ARIZONA LED all gainers at 8.9 percent, the two largest dairy states - California and Wisconsin - rose 4.4 and 3.4 percent, respectively.
CULLING REACHED THE SLOWEST PACE since 2010. Through July, 1.63 million dairy cows have been sent to packing plants, down 11 percent from last year. This trend could continue for the remainder of the year.
HEIFER INVENTORIES REMAINED TIGHT with 300,000 fewer animals (500 pounds and greater) this July compared to the same time three years earlier. That represented a ratio of 42 heifers for every 100 cows.
CANADIAN HEIFER INVENTORY (1 year or older) was 452,000 on July 1, down 1 percent from 2013 and off 5 percent from five years ago.
FLUID MILK TOOK ANOTHER HIT as domestic consumption fell 2.1 percent to 51.9 billion pounds. Only the 2-percent milk category grew sales with whole, 1-percent, skim and all flavored milks down compared to 2012.
MEANWHILE, DAIRY PROMOTION lifted milk prices by 55 cents per hundredweight from 1995 to 2011, reported a Texas A&M study. The largest returns were for butter with a $9.63 gain for every $1 invested.
INVESTMENT IN DAIRY EXPORTS and cheese were also good bets with a return of $5.12 and $4.26, respectively, for every $1 of investment. Fluid milk promotion dollars yielded the lowest return at $2.14.
LARGE FARMS, defined as those that sold over 1.5 million pounds of milk in May, represented just 233 of the 11,553 farms in the Northeast Order. This group produced 45 percent of New York's milk; 38 percent in Vermont, but just 11 percent of Pennsylvania's pooled milk.
OSHA STARTED TO UNDERTAKE dairy safety inspections in New York under the agency's Local Emphasis Program. After the first dozen or so inspections, OSHA will decide if it will expand and inspect more farms.