As printed in our March 25, 2013 issue...
GLOBAL PRODUCT PRICES ARE ROBUST. In early March trading, the eight-product mix climbed 10 percent to $1.91 per pound. However, the global auction hasn't translated into the U.S. futures trading which held steady at $18 per cwt. for March to September contracts.
SEQUESTRATION REDUCED USDA'S BUDGET by 5 to 7 percent. With USDA's high labor ratio, furloughs are expected. Food stamps and CRP would see no cuts, nearly all other areas, including FMMOs, would be cut.
FEBRUARY MILK-FEED RATIO was 1.54. Values used: $19.40 milk, $6.89 corn, $14.20 soybeans and $218 alfalfa. Feed cost $12.60 ($11.35 a year ago; $9.39 two years ago) for a $6.80 income over feed cost.
USDA PROJECTED we will plant 96.5 million acres of corn this year and 77.5 million of beans. FAPRI estimate was 0.4 to 1 percent higher for both crops. Estimated corn acreage would represent a post-WWII record.
MORE TYPICAL WEATHER PATTERNS could moderate grain prices. USDA forecasted $4.80 per bushel corn; $10.50 soybeans. The University of Missouri's FAPRI was more bullish as numbers call for $5.18 and $11.49.
HOWEVER, 53 PERCENT OF THE NATION continued to be plagued by a moderate to exceptional drought. This dry spell mirrors 1988's conditions.
NEW ZEALAND HAS BEEN IMPACTED by drought, especially on the North Island (home to two-thirds of the nation's herd). It has culled 17 percent more cattle this season compared to the same time last year.
STATESIDE, CULLING WAS STRONG, TOO. In the first two months, 517,300 cows have been sent to packing plants, up 5.5 percent from 2012.
WHILE DAIRY EXPORTS ARE OFF THEIR PEAK, reduced drought-related milk flow in Oceania could boost sales. January exports represented 12.3 percent of U.S. milk solids; imports were 3.7 percent.
EXPORTS HAVE BEEN ABSORBING new U.S. milk output. Since 2003, milk flow has risen 18 percent; 56 of that growth has been sold overseas.
DAIRY PRODUCT USE ROSE 1.7 percent during 2012 as measured by commercial disappearance. Nonfat dry milk was up 17.9 percent; American cheese, up 2; Italian cheese, up 1.6; butter, up 1.6. Fluid fell 1.9 percent.
CANADIAN HEIFER INVENTORY (one year or older) was 472,600 on January 1, up 1 percent from 2012; U.S. (over 500 pounds) was 4.55 million, down 2.4 percent. Cow counts: 9.2 million in U.S.; 960,600 in Canada.
BRIEFLY: Geographical indications (GIs) have gained importance in European exports. Cheese accounted for 11.5 percent or $8.3 billion of the $72.2 billion in 2010 sales. USDA's annual Pesticide Data Program Survey found that milk samples were all under the EPA's tolerance threshold. Only five of 743 random samples (0.7 percent) had any detectable levels.
