As printed in our March 25, 2012 issue...

A $17.90 ALL-MILK PRICE is the latest USDA estimate for 2012. The projection is down 80 cents since January due to higher than expected gains in milk production from more cows and mild winter weather.

A 65-CENT SWING took place in average April-to-December Class III futures during a two-week window beginning on February 27.

HIGHER THAN EXPECTED JANUARY OUTPUT led to some of the market volatility. American-style cheese production rose 3.1 percent while the butter churn grew 8.5 percent when compared to last year.

TOTAL CHEESE STOCKS FELL 7.1 percent compared to last January. The reduction in inventories does indicate that consumption is growing. Meanwhile, butter in storage is up over 30 percent compared to a year earlier.

FLUID MILK SALES DECLINED for the third straight year. Last year, U.S. beverage sales totaled 53.7 billion pounds, down 1.8 percent from 2010.

DAIRY EXPORTS ROSE 28 PERCENT to $425 million when compared to the previous January. Cheese and dry whey shipments were up while butter, whole milk powder, and whey protein concentrate dropped.

CULL COW PRICES averaged $80.10 per cwt., in January, reported USDA. It is the highest monthly price on record. Replacements sold for $1,460. That is up $160 since last year, down $20 from October.

RATION COSTS SENT the February Milk-Feed Ratio down to 1.58 which is the lowest point since June 2009. Income over feed costs now at $6.58.

MILC PAYMENTS BEGAN in February. The projected payment for April may push $1 per hundredweight. May-to-July checks could range from 70 cents to $1 with payments projected through the remainder of 2012.

A RECORD 2012 CORN CROP of 14.27 billion bushels is being forecast by USDA. FAPRI's harvest estimate is 2.5 percent lower. USDA says, corn could be planted on 94 million acres, the most since the end of World War II.

MILK IN FEDERAL ORDERS totaled 126.9 billion pounds in 2011. That is down slightly from the previous year. When combined with California's state order, nearly 86 percent of milk is subject to order provisions.

A PETITION TO MODIFY California's whey pricing mechanisms has been filed by seven cooperative and producer groups. The formula is not accurately tracking whey prices which lag federal orders by $1.93 per cwt.

INTEREST RATES ARE NEAR RECORD LOWS with home loans at 3.88 percent on a 30-year fixed. Business rates are running slightly higher.

BRIEFLY: The February Class III was $16.06, down 99 cents from January. USDA unveiled new CRP options geared towards enrolling one million acres of grasslands and wetlands. New Zealand's Fonterra plans to offer stock to the public for the first time, reports The Wall Street Journal.

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