In your November 2019 issue . . .
“BETTER MILK PRICES than in the past five years,” has been pegged by many market analysts. From early October to early November, Class III futures for November climbed from the high $18.80 range to $19.95.
DURING THE SAME TRADING WINDOW, Class III contracts for the first six months of the year climbed by 25 cents to reach a $17.15 average.
CHEESE MATTERS. Since 2005, the correlation of monthly wholesale cheese prices to the U.S. All-Milk price is a whopping 0.91, said the University of Missouri’s Scott Brown, noting a 1.0 correlation would be perfect.
THAT COMPARED TO a 0.73 correlation for nonfat dry milk and only 0.38 for butter. “It’s a good bet that if cheese prices stay strong, milk prices will follow,” said Brown. Cheese prices eclipsed $2 per pound in September, with blocks selling for $2.07 per pound and barrels fetching $2.33 during November 7 trading activity on the CME.
HIGH SLAUGHTER RATES PERSIST in response to low milk prices and low margins experienced by dairy farmers most of this year. Through this September, 81,100 more dairy cows headed to packing plants when compared to the same time last year, reported USDA.
WHEN LOOKING AT CULL RATES, 33.4 percent of the milk cow herd was culled by dairy farmers in 2018. This year, the slaughter rate has been on pace to top 34 percent. Given those two percentages, there are 123,000 fewer milk cows in the U.S. when compared to January 2018.
ON THE FLIP SIDE, HEIFER PRICES have rebounded, climbing $170 per head since April to reach $1,310. Arizona had the high at $1,450.
COW PRODUCTIVITY, NOT COW NUMBERS, should be the new metric contends Peter Vitaliano of the National Milk Producers Federation (NMPF). Today, cows produce 10 percent more milk solids than in 2014.
ON THE EXPORT FRONT, Cooperatives Working Together (CWT) continued to “grease the wheels” on dairy exports. Voluntarily funded by dairy farmers, CWT has helped export 91 percent of all American-style cheese, 76 percent of whole milk powder, and 54 percent of butter.
CREAM CHEESE IS A NEW PRODUCT being supported by CWT. “It’s a gateway dairy product in dairy export markets due to its mild taste and versatility,” pointed out Tom Balmer, NMPF executive vice president.
AGRI-MARK IMPLEMENTED SUPPLY CONTROLS. The plan imposes a $5 per cwt. penalty for farms going over base as calculated by the highest month in the past three years. The plan impacts farms producing over 2 million pounds annually or one-third of the co-op’s membership.
LEADING HOUSE OFFICIALS introduced the Farm Workforce Modernization Act. Pundits believe the bipartisan bill has a good chance of passage.
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