Washington Dairygrams - July 2012



As printed in our July 2012 issue...

A BLISTERING HEAT WAVE and dry conditions pushed corn prices up 28 percent in the last two weeks of June. Indiana, Illinois, eastern Iowa and Missouri have had less than half the normal rainfall in the past 30 days.

CORN’S CONDITION PLUMMETED 24 percentage points during June as the leading 18 corn states had 52 percent of its crop rated as fair to very poor. Illinois, the largest corn state, was at a troubling 81 percent.

AN EXTENDED DROUGHT could push corn prices even higher. Under a three-way scenario, University of Illinois researchers project $5.80 per bushel corn in a mild drought; $6.20, moderate; and $7.50, severe drought.

CLASS III FUTURES ROSE OVER $1 for the six remaining 2012 contracts during June trading. Meanwhile, CME barrel cheese rose 15-1/4 cents in the final three weeks of June to settle at $1.67-1/2; 3-1/2 cents above blocks.

THE DAIRY SECURITY ACT was included in the Senate’s version of the 2012 Farm Bill which passed on a 64 to 35 vote in late June. The House Ag Committee is expected to begin “markup” of the bill by mid-July.

CANADA AND MEXICO have been invited by the U.S. and eight other nations to join the Trans-Pacific Partnership (TPP) trade negotiations. It could put Canada’s supply management system in the crosshairs.

ARIZONA’S IMMIGRATION LAW had three of its four provisions struck down by the Supreme Court. Justices let stand the requirement that asks police to check immigration status of people who they suspect are illegal.

THIS MAY, COW NUMBERS FELL for the first time since July 2010. The national herd now stands at 9.27 million. California reduced cows by 2,000 as many processing plants are now enforcing production bases.

MONTHLY MILK OUTPUT still rose 2 percent over 2011. Utah once again led all gainers, up 8.3 percent, followed by Colorado (+8.2) and Florida (+7.3). California was up 1.9 percent, while Wisconsin grew 2.4 percent.

EXPORTS CONTINUE TO OUTPACE the prior year as April’s shipments grew by 17 percent to reach $460 million. Cheese exports also grew 31 percent for the month. Meanwhile, imports fell by 6 percent to $193 million.

BRIEFLY: The June Milk-Feed Ratio is near May’s record low. Income over feed cost is now $4.43. Butter sales grew faster than olive oil and margarine last year, reported Advertising Age magazine. There could be 2.7 billion new dairy consumers in low-income, developing countries by 2014, predicted Tetra Pak, a global supplier of food packaging. Cargill has reached a settlement with 39 plaintiffs in a dairy feed lawsuit, although it strongly believes it did nothing wrong. Kraft Foods announced plans to close a Waupaca, Wis., cheese plant next year and combine manufacturing with a facility located in Wausau. Grassland Dairy Products of Greenwood, Wis., plans to double milk plant capacity.

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