Washington Dairygrams - September 10, 2013


As printed in our September 10, 2013 issue...

CORN AND SOYBEAN FUTURES CONTRACTS stiffened in late August trading after one of the wettest springs on record gave way to an abnormally dry summer. July and August could turn out to be the driest since 1936 for Iowa, Indiana and Illinois — all major corn and soybean states.

IN LATE AUGUST TRADING, corn jumped 50 cents per bushel when compared to mid-month levels to settle at $5 to $5.20 for December-to-May contracts. Beans rose over a dollar to $13.20 to $13.90 per bushel.

DAIRY FUTURES ALSO HAD BEEN SLUGGISH, but contracts rebounded when grain pushed higher in late month trading. September-to-February Class III contracts averaged $17.25 with a range of $16.35 to $18.14.

STRONG PRODUCT INVENTORIES have placed downward pressure on the markets. While July butter and cheese stocks were down from June, butter reserves were 26 percent higher than last year, cheese 5 percent.

JULY MILK PRODUCTION ROSE 1.1 PERCENT nationally. In the West, California was down 3.5 percent, Arizona -2.0, Idaho -1.1 and Oregon -0.9. All other major dairy states expanded milk flow.

DAIRY COW NUMBERS CONTINUE TO GO UNREPORTED due to the federal government’s sequester. However, July culling activity was strong in California and Arizona exceeding last July by 12 percent.

JANUARY-TO-JULY CULLING totaled 1.82 million dairy cows, up 3.2 percent or 56,000 head from 2012. If projections hold, 2013 could top last year — the highest dairy culling since 1986’s whole herd buyout program.

THE NEW ZEALAND GOVERNMENT WILL INVESTIGATE three dairy product safety issues from this year. The unrelated incidents involved products contaminated with fertilizer, bacteria and nitrates.

DESPITE PARTIAL TRADE BANS, prices rose 2.3 percent at New Zealand’s recent Global Dairy Trade (GDT) auction. The eight product mix averaged $2.24 per pound which was higher than U.S. markets.

FOR EVERY $1 OF DAIRY CHECKOFF FUNDS farmers invested in promotion, there was a return of $3.95 on enhancing fluid milk sales; $4.43 for cheese; and $6.26 for butter, stated USDA’s annual report to Congress.

PUT ANOTHER WAY, beverage milk consumption was 5.8 percent higher than it would have been without dairy promotion efforts; cheese grew 2.8 percent during the same time; butter 1.4 percent.

BRIEFLY: Producers take of the retail dollar was 50.3 percent for fluid milk, 30.8 for cheese, 41.7 on butter and 29.6 for other dairy products. Milk consumption plummeted 37.4 percent when flavored milk was removed one to five days a week in California, Colorado and Illinois schools.

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