As printed in our October 25, 2014 issue...
CLASS III PRICES POSTED A NEW RECORD in September notching $24.60 per hundredweight for milk headed to the cheese vat. Strong domestic and international demand has kept near-term prices high.
LONG-TERM, CLASS III FUTURES WERE DOWN. January to September contracts traded 50 cents lower during the two-week window from October 1 through mid-month, averaging $17.30 per cwt.
USDA ECONOMISTS HAVE BEEN ECHOING the same market forecast having lowered the 2015 All-Milk price prediction by 85 cents from August's $20.25 midpoint. USDA's revised estimate is $19.40.
STIFFER TRADE WINDS SLOWED U.S. dairy exports as August sales reached the lowest point since January on a daily average or 14.9 percent on a total milk solids basis. Demand held steady, but ample supplies and lower prices in the EU and New Zealand reduced U.S. trade amounts.
AS NEW ZEALAND ENTERED ITS SPRING FLUSH, most market analysts have projected strong production by the world's leading exporter. Additionally, the EU's milk output rose 5.8 percent through July.
GRAIN PRICES CONTINUE TO RETREAT as new crop corn traded near $3.50 and soybeans settled in the $9.50 range. As a result, ethanol futures also followed suit as prices fell nearly 30 percent as grain fuel inventories reached the highest point since March 2013.
THE MILK-FEED RATIO IMPROVED to its best level since November 2007. September's 2.90 ratio yielded a $16.38 income over feed cost. Values used: $25 milk, $3.38 corn, $11.20 soybeans and $197 alfalfa hay.
DAIRY FARM DEBT HAS WORRIED some financial specialists, despite better margins. Western dairy farms have been paying about 85 cents per hundredweight to service debt, noted Genske, Mulder and Company. That debt service mirrored the 1980s and 1990s with 7 percent interest.
AMERICANS ATE MORE CHEESE THAN EVER last year, consuming 33.7 pounds of curd. Top varieties were: Mozzarella, 10.82 pounds; Cheddar, 9.66; Provolone, 1.06; Swiss, 1.05; and Parmesan, 0.99.
YOGURT CONSUMPTION HAS DOUBLED since 2001 when U.S. consumers ate only 7 pounds of the cultured dairy product. In 2013, per capita consumption posted a record 14.9 pounds, up from 2012's 14.1 tally.
DAIRY DEMAND COULD GROW BY 36 PERCENT, reported a Tetra Pak study. Global demand will rise largely because of population growth and rising prosperity in Asia, Latin America and Africa.
AT $246 BILLION, FARM CO-OPS posted record sales in 2013 with dairy co-ops netting nearly 30 percent of the marketing total. Overall, dairy was a major focus for nine of the nation's top 20 cooperatives, reported USDA.