MARKET WATCHMARKET WATCH BLOOD MEAL OVERPRICEDFEED

Normand St-PierreExtension Dairy SpecialistOhio State Universityst-pierre.8@osu.edu

Protein prices are up; what is the best source?

It depends! It depends on when and where. Let’s say you are a dairy producer who has an operation in both California and Idaho. What is priced attractively in California is not the same as in Idaho. For example, as I write this column, distillers dried grains are overpriced in California but underpriced in the Northwest. Also, what was attractively priced two months ago might be overpriced by now.

� e feed table reports bracket prices for each feed. � e low and high values delineate the 75 percent confi dence range for a feed. If you can buy a feed at a price less than the low, then it is a bargain. If the market

price exceeds the high, then it is overpriced. If your price is between the low and high, then the feed is priced approximately for what it is worth. � e ‘Status’ column provides you with a quick indicator of a feed status: a ★indicates a bargain feed; a ■ denotes an overpriced feed; a blank entry indicates the feed is priced about right. Lastly, a few feeds carry a special status symbol: a is shown if a feed is grossly overpriced (in which case only the high column has a price, and the reported price is the calculated break-even

price), if a feed is grossly underpriced (in which case only the low column has a price, and the reported price is the calculated breakeven price) or if we are in no position to judge a feed status. � e third option occurs, for example, with the diff erent grades of alfalfa hay. We can calculate what each grade is worth, but we do not have suffi cient

market information to identify an accurate market price for each grade with which we can compare to the values calculated by Sesame.

As usual, we must remind you that the correct strategy is to maximize the use of bargain feeds while minimizing the use of overpriced ones, all within the constraint of a balanced ration.

In this column, we use as a reference a cow weighing 1,400 lbs, producing 70 lbs per day of milk containing 3.7 percent fat, 3.1 percent true protein and 5.7 percent other solids. Nutrient costs are expressed three diff erent ways in the nutrient table: $ per cow per day, ¢ per pound of dry matter (DM) and $ per hundredweight of milk. Beware that these feed costs do not include the costs of feeding dry cows and the replacement herd. PD

8 Progressive Dairyman Issue 7 • May 1, 2012

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Mitch’s RepairJerome, ID

Fox Repair Corvallis, MT

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Floyd A. BoydMadras, ORMerrill, OR

Boyd’s Implement Tillamook, OR

Gunnison Implement Gunnison, UT

Ellis Equipment Logan, UT

Greenline EquipmentNephi, UT

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Table 1Item1 Southwest West NorthwestNEL (¢/Mcal) 13.3 18.4 22.3

MP (¢/lb) 33.8 20.4 5.3

e-NDF (¢/lb) 13.6 8.5 3.5

ne-NDF (¢/lb) -8.4 -4.2 -10.2

Nutrient costs ($/cow per day)2 7.18 7.80 7.61

Nutrient costs (¢/lb of feed DM) 14.6 15.9 15.5

Nutrient cost ($/cwt of milk) 10.25 11.15 10.871 NEL = Net energy for lactation; MP = metabolizable protein; e-NDF = effective neutral detergent fi ber; ne-NDF = non-effective NDF.2 1,400 lb cow producing 70 lbs/day at 3.7% fat, 3.1% protein and 5.7% other solids.

Supreme hay ($/ton)

Apr. 16 Price 3-week change

Central CA $255 $45 ID $230-$240 NT

UT $150-$180 $30-$50 MT $185-$210 NCWY $200 NC

WA/OR $255-$285 $5

CO $255-$270 $20

Source: USDA National Hay, Feed & Seed Summary

Soybean meal* ($/ton)

Apr. 16 Price 3-week change

CA $436 $20

ID $435 $20

NM $418 $11

*Price quotes contributed by Western Milling, J.D. Heiskell and independent sources.

Corn* (in tons) (in bushels)

Apr. 16 Price 3-week change

CA $283 $2

ID $279 $4

NM $267 NC

Price 3-week change

$7.92 .06¢

$7.81 .11¢

$7.48 NC

Apr. 16 Price 3-week change

CA $395 $25

ID $369 $14 NM $325 NC

Cottonseed* ($/ton)

COMMODITIES

Mar2013

July MaySept DecMay2012

Low

High

Settle$5.20$5.40$5.60$5.80$6.00$6.20$6.40$6.60$6.80

Jan2013

MayJuly Aug Sept Oct Dec MarMay2012

High

Settle Low

$330

$344

$358

$372

$386

$400

BLOOD MEAL OVERPRICED

FUTURESHigh: $6.66 Low: $5.22

High: $399.30 Low: $338.80

Corn (dollars per bushel)

CornMay ’12 contracts $6.41 -.12¢ $6.58/$6.04July ’12 contracts $6.36 -.16¢ $6.53/$6.04

APR. 17 Avg. 3-week settle High/Low

Soybean mealMay ’12 contracts $385.86 +$19.00 $395.80/$373.00July ’12 contracts $387.16 +$19.20 $397.80/$373.90

Source: Chicago Mercantile Exchange data

Soybeans (dollars per ton)

Issue 7 • May 1, 2012 Progressive Dairyman 9

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Southwest West NorthwestFeedname Low High Status Low High Status Low High Status

Alfalfa hay, supreme (190 RFV) $305 $365 $327 $374 $318 $369

Alfalfa hay, premium (170 RFV) $289 $349 $308 $355 $297 $348

Alfalfa hay, good (150 RFV) $253 $313 ■ $263 $310 $243 $294

Alfalfa hay, fair (130 RFV) $228 $288 $232 $279 $206 $257 Alfalfa hay, low (110 RFV) $201 $261 $197 $244 $166 $217

Almond hulls - - $209 $244 ★ - -

Bakery byproduct $240 $287 ■ - - - -

Barley feed $237 $275 ■ $306 $328 ★ $319 $344 ★

Beet pulp - $216 ■ - - $209 $247 ■

Blood meal - $651 ■ - $591 ■ - $488 ■

Canola meal - - $314 $335 ■ $296 $323 ■

Citrus pulp - - - - - -

Corn grain, ground $243 $286 - - $339 $366 ★

Corn grain, steam fl aked - - $338 $363 ★ - -

Corn silage (32% DM) $91 $113 ★ $103 $119 ★ $95 $113 ★

Cottonseed hulls $71 $164 ■ $90 $151 ■ - -

Cottonseed meal $318 $356 ★ $338 $368 ★ - -

Cottonseed, whole $348 $445 ★ $373 $440 $359 $431

Distillers dried grains $249 $298 ★ $321 $356 ■ $289 $332 ★

Feather meal $488 $561 $505 $505 - -

Fishmeal, Menhaden - $545 ■ - - $475 $475

Gluten feed $240 $271 ★ $293 $316 ★ $277 $306 ★

Gluten meal - - $490 $559 ■ - -

Hominy $217 $254 ★ $290 $314 ★ $313 $313

Linseed meal $247 $286 - - - -

Meat meal $405 $452 ■ $435 $474 ★ $420 $478

Molasses $170 $209 ■ $224 $244 ■ $251 $274 ■

Rice bran $233 $276 ★ $332 $0 ★ - -

Saffl ower meal - - $179 $225 - -

Sorghum grain, rolled $238 $274 ★ $296 $316 - -

Soybean hulls $113 $188 ■ $199 $250 $146 $215 ■

Soybean meal, expeller $430 $479 $456 $500 ★ $399 $465

Soybean meal, 44% $331 $363 ■ $378 $404 ■ $383 $383

Soybean meal, 48% $376 $414 $409 $442 $387 $436 ■

Tallow - $623 ■ $761 $843 ■ - -

Wheat bran - - $220 $260 - -

Wheat feed $236 $278 $324 $324 - -

Wheat middlings $163 $211 ★ $242 $277 ★ $225 $269 ★

WHEAT MIDDLINGS A BARGAIN

MARKET WATCHMARKET WATCH Tracking down dairy profitabilityMargin

Normand St-PierreDairy Extension SpecialistThe Ohio State Universityst-pierre.8@osu.edu

Table 1 Dairy productivity and profitability analysis, March 2012.Northeast Southeast Midwest Southwest West Northwest National

ProductivityMilk yield (lbs/cow per day) 56.45 52.80 56.17 65.42 65.65 61.35 60.65

Fat (%) 3.79 3.64 3.76 3.72 3.78 3.83 3.77

Protein (%) 3.09 3.06 3.07 3.06 3.12 3.16 3.10

Nutritional statisticsNEL (Mcals/cow per day) 29.20 27.63 29.01 31.90 32.24 31.02 30.55

MP (lbs/cow per day) 4.26 4.02 4.22 4.73 4.81 4.61 4.50

eNDF (lbs/cow per day) 9.66 9.31 9.63 10.26 10.33 10.05 9.96

neNDF (lbs/cow per day) 3.22 3.11 3.21 3.42 3.44 3.35 3.32

Dry matter intake (lbs/cow per day) 46.10 44.40 45.90 48.90 49.20 47.90 47.47

Feed dry matter cost (¢/lb) 12.10 11.90 11.10 13.50 14.10 13.90 12.83

Gross feed effi ciency (lb milk/lb DM) 1.22 1.19 1.22 1.34 1.33 1.28 1.28

Milk pricingClass I utilization (%) 41.4 74.3 14.2 62.9 20.0 28.7 30.2

Average class I differential ($/cwt) $2.75 $4.60 $1.70 $2.81 $2.33 $1.85 $2.30

Producer price differential ($/cwt) $1.14 $3.42 $0.24 $1.77 $0.47 $0.53 $0.77

Per-cow economicsGross income from milk ($/cow per day) $9.91 $10.32 $9.31 $11.78 $11.13 $10.56 $10.43

Nutrient (feed) costs ($/cow per day) $5.34 $5.29 $5.09 $6.61 $6.94 $6.67 $6.07

Income-over-nutrient-costs ($/cow per day) $4.57 $5.03 $4.22 $5.17 $4.19 $3.89 $4.36

Per-hundredweight economicsMilk price ($/cwt) $17.56 $19.54 $16.57 $18.00 $16.95 $17.20 $17.19

Nutrient (Feed) costs ($/cwt) $9.46 $10.02 $9.06 $10.10 $10.57 $10.87 $9.97

Milk Margins over Feeds ($/cwt) $8.10 $9.52 $7.51 $7.90 $6.38 $6.33 $7.23

� e Cow-Jones II enters the red zone. � e national Cow-Jones II – an index tracking dairy profi tability across the nation – averaged $7.23 per hundredweight (cwt) in March. � is is less than the breakeven value of $7.50 that marks the threshold of positive milk margins in the dairy sector. It marks a drop of $1.52 per cwt from January and $0.37 per cwt from February. Considering that the national milk supply is currently at a record level, the odds of a quick turnaround in milk prices seem low. Feed prices have increased recently and there is absolutely no sign of any weaknesses in feed prices in the near future. � is is not good news, Señor Jones …

� e Cow-Jones II tracks down monthly profi tability of the dairy industry across six regions of the U.S. In our analyses, income is based on the average milk production and milk composition in a given region for the month. Milk prices are calculated from Federal Orders component prices plus a producer price diff erential for Class I (fl uid) milk based on a two-year average Class I utilization for the given month and a weighed average Class I diff erential in a region.

Feed costs are estimated from the average cost of supplying the nutrients required for the production level and milk composition for each region. � e required nutrients are net energy for lactation (NEL), metabolizable protein (MP), eff ective neutral detergent

fi ber (eNDF) and non-eff ective NDF (neNDF). Requirements are calculated according to NRC (2001).

Unit prices of the four nutrients are estimated from the composition and market prices of all major commodity feeds traded in a given region using the Sesame method. Income-over-feed costs (IOFC) are calculated on a per-cow basis. Milk-margins-over-feed (MM) are calculated on a per-hundredweight basis. � e national MM is the weighed average MM across all six regions and is labeled the Cow-Jones II index (CJ2).

Average production is for lactating and dry cows combined. � e national average of 60.7 lbs per cow per day translates to approximately 22,140 lbs per cow per year, or 72.3 lbs per lactating cow per day. � e cost of feeding the replacement herd is not factored in any of the calculations. Beware that the regions used in the analysis are not the same as the Federal Orders. For example, we merged the Florida (FO 6) and Southeast (FO 7) Federal Orders into a single region (Southeast) because the two Federal Orders combined account for less

than 5 percent of the national milk production.

� e analysis is based on the cash market for feeds. Some producers may be faring better from having successfully used options and futures contracts or by having pre-purchased some of their feeds. � ey should congratulate their purchasing managers, not their cows. Likewise, many dairy producers, especially in the Midwest, grow their own corn for less than the current cash market. But that’s the reward for being a crop producer these days. � e cows cannot claim any credit. PD

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10 Progressive Dairyman Issue 7 • May 1, 2012

MARK ETWATCHApril 16, 2012

Top Springer

Top Average

Medium Holstein Springer

ShortbredsOpen

Heifers Light

Open Heifers Heavy

HeiferCalves

BullCalves

Breeding Bulls

Empire Livestock - Burton MarketVernon, NY (800) 257-1819 (sale 4/12/12)

$1,700NC

$1,300 NC

$1,200 NC

$1,100NC

$300 $100

$700 NC

$100NC

$125NC

$800NC

Mammoth Cave Dairy Auction, Inc.Smiths Grove, KY (800) 563-2131(sale 4/10/12)

$1,600 NC

$1,300NC

$1,260 $60

N/T$340$50

$880$30

$130$10

$120$10

N/T

New Holland Sales StablesNew Holland, PA (717) 354-4341(sale 4/11/12)

$1,700$75

$1,550$25

$1,375$25

$1,225$100

$725$75

$1,000$75

N/T N/T$1,400

NC

Mid-Georgia Livestock AuctionJackson, GA (770) 775-7314 (sale 4/10/12)

$1,700$100

$1,575$75

$1,150$25

N/T$690$40

$850$125

$400$270

$110 $10

N/T

Central Livestock AssociationAlbany, MN (800) 733-6828 (sale 4/10/12)

$1,385 $215

$1,200$200

$1,185 $200

$1,125$160

$115/cwt $118/cwt N/T N/T$1,060$90

Equity Co-op LivestockStratford, WI (715) 687-4101Rocky Olsen (608) 434-4037 (sale 4/10/12)

$1,675$75

$1,500NC

$1,275$25

$1,100NC

$600NC

$975 $225 $220$1,200$50

Lake Odessa LivestockLake Odessa, MI (616) 374-8213(sale 4/10/12)

$1,700NC

$1,450NC

$1,000 $850NC

$550NC

$800$50

$500NC

N/T $1,300$50

Norwood Dairy Cattle AuctionNorwood, MO (417) 746-4242 (sale 4/13/12)

$1,410$190

$1,325$125

$1,150$50

$1,280$180

$500$25

$940$80

$220$25

$205NC

N/T

Pipestone Livestock Auction MarketPipestone, MI (507) 825-3306 (sale 3/15/12)

$1,910$10

$1,653$22

$1,588$20

N/T$126/cwt$34/cwt

$130/cwtNC

N/T N/T N/T

Spring� eld Livestock Marketing Center Springfi eld, MO (417) 869-9500 Doug Thomas (417) 840-9316 (sale 3/28/12)

$1,550$90

$1,300$40

$1,100$110

$1,190$180

$460$115

$850 $30

$260$190 NC

N/T

Topeka Livestock AuctionTopeka, IN (206) 593-2522 (sale 4/10/12)

$1,475$35

$850$50

N/T N/T$900

NC$1,625$175

$170$120

N/T$1,000$50

Tri-State LivestockSioux Center, IA (712) 722-0681Mike Koedam (712) 470-0198 (sale 4/4/12)

$1,650 $400

$1,602$12

$1,550$120

N/T N/T N/T N/T N/T N/T

United Producers, Inc.Marion, MI (517) 294-3484 (sale 3/23/12)

$1,725$50

$1,650 $50

$1,300NC

$1,150NC

$600 NC

$1,000$50

$200NC

N/T $1,000

NC

Brush Livestock of ColoradoBrush, CO (970) 842-2801 (sale 4/5/12)

$1,950$325

$1,775$265

$1,610$185

$1,175$250

$500$10

$1,010$80

N/T N/T N/T

Chehalis Livestock MarketChehalis, WA (360) 748-3191 (sale 4/6/12)

$1,325$50

$1,250$1,100

NCN/T $118/cwt $102/cwt N/T

$80$20

N/T

Producers LivestockJerome, ID (208) 324-4345 (sale 4/4/12)

$1,580 NC

$1,481$38

$1,389$53

$1,300$360$18

$595$145

N/T N/T N/T

Smith� eld Livestock AuctionSmithfi eld, UT (435) 563-3259 (sale 4/5/12)

$1,485$15

$1,300$100

N/T$1,150

NC$97/cwt

NC$99/cwt

NCN/T N/T N/T

Toppenish Dairy Replacement SalesToppenish, WA (509) 865-2820 (sale 4/2/12)

$1,450$200

$1,300 $150

$1,150$150

$1,100NC

$145/cwtNC

$115/cwtNC

$100NC

$120NC

N/T

A & M Livestock Auction, Inc.Hanford, CA (559) 582-0358 (sale 4/11/12)

$1,600$100

$1,400NC

$1,150$150

$1,050 $150/cwt $90/cwt $120 $160 $1,050

Sulphur Springs Livestock and Dairy AuctionSulphur Springs, TX (903) 885-7739(sale 4/5/12)

$1,625$65

$1,150$50

$1,150$50

$900$75

$650 $50

$980$80

$300$40

$250 $10

N/T

Escalon Livestock Market, Inc.Escalon, CA (209) 838-7011(sale 3/28/12)

$1,450 NC

$1,250 NC

$1,150$100

N/T$90/cwt

NC$115/cwt

NCN/T N/T

$900NC

Contact Judy about being included in Progressive Dairyman’s Market Watch! judy@progressivedairy.com • (208) 324-7513 NC = No change N/T = No test Decrease in price Increase in price

Log on to www.progressivedairy.com/marketwatch to get auction reports from more locations!

MARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHMARKET WATCHCATTLE

NOTE: The colored bar represents cumulative year-to-date milk production for 2012. When it does not surpass the dotted line at the center of the box, it indicates state production is below the previous year’s total (2011). When it does surpass the dotted line, it indicates production is above the previous year’s total.

Southwest Region2,830.9 +102,000 +3.9%

17,173.2 +7.2%17,173.2 107.2%

Northwest Region1,210.5 +51,859 +1.9%

6,827.5 +6.0%6,827.5 106.0%

MARKET WATCHMARKET WATCH OKLAHOMA MILK PER COW UP 7 PERCENTMILK

Texas437 +2

1,888 +2.1%2,503 +6.2%

2,503 106.2%

Utah91 +3

1,753 +3.5%484 +9.5%

484 109.5%

Washington263 -1

1,955 +0.6%1,560 +6.2%

1,560 106.2%

Arizona192 NC

2,112 +3.8%1,230 +8.4%

1,230 108.4%

California1,784 +62,021 +5.0%10,934 +7.8%

10,934 107.8%

Nevada29 NC

1,842 +6.1%162 +7.3%

162 107.3%

Oklahoma52 NC

1,591 +7.0%251 +4.1%

251 104.1%

Hawaii1.9 NC

1,249 +3.2%7.2 +4.3%

7.2 104.3%

Colorado133 +2

1,933 +0.5%780 +8.9%

780 108.9%

Montana14 NC

1,743 +6.1%74 +7.2%

74 107.2%

Wyoming6 NC

1,637 -3.0%29.8 -2.0%

29.8 98.0%

Alaska0.5 NC

1,121 +12.1%1.7 -5.6%

1.7 94.4%

Idaho580 NC

1,864 +3.0%3,279 +5.2%

3,279 105.2%

New Mexico335 +2

2,053 +0.2%2,086 +4.8%

2,086 104.8%

Oregon123 +1

1,659 -0.5%619 +4.0%

619 104.0%

U.S. Quarterly Total 9,254 +381,817 +3.1%50,995 +5.2%

50,995 105.2%

Legend

Number of cows(in thousands)

Milk per cow(Q1 monthly avg.)

(in lbs.)Total milk

production (quarter)

(in millions of lbs.)

Year-to-date milkproduction (total)(in millions of lbs.)

Percentage of year-to-date production versus previous year-to-date

Quarterly change(in thousands)

Annual percentchange

Annual percentchange

90% 100% 110%

12 Progressive Dairyman Issue 7 • May 1, 2012

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East Coast Region2,244.6 +81,648 +1.8%

11,223.9 +2.7%11,223.9 102.7%

Midwest Region2,968 +151,752 +3.5%15,770 +4.7%15,770 104.7%

TOTAL U.S. MILK PRODUCTION UP 5.2 PERCENTVermont

133 -11,589 +1.2%641 +0.8%

641 100.8%

Virginia96 NC

1,559 +1.2%454 +3.4%

454 103.4%

Wisconsin1,267 +21,762 +3.8%6,771 +5.0%

6,771 105.0%

Florida122 +2

1,756 -1.2%650 +4.2%

650 104.2%

Georgia80 +2

1,673 +5.7%406 +6.8%

406 106.8%

North Carolina45 NC

1,824 +7.1%249 +8.3%

249 108.3%

Maryland52 NC

1,617 +1.6%255 +0.8%

255 100.8%

New Jersey7.5 NC

1,538 +5.5%35 NC

35 100.0%Delaware5 NC

1,648 +1.8%25 +2.9%

25 102.9%

Connecticut18.5 NC1,657 -0.0%

93 +1.1%

93 101.1%

Massachusetts12 NC

1,511 +7.4%55 -3.5%

55 96.5%

Rhode Island1.1 NC

1,469 +1.0%4.9 +2.1%

4.9 102.1%

South Carolina16 NC

1,648 +5.5%80 +6.7%

80 106.7%

Alabama10 NC

1,286 -1.3%39 -9.3%

39 90.7%

Mississippi14.5 +11,319 +0.6%

58 -1.7%

58 98.3%

Louisiana18 NC

1,282 +5.9%70 +1.4%

70 101.4%

Illinois100 +2

1,685 +3.0%511 +6.2%

511 106.2%

Indiana175 +3

1,759 +3.9%934 +6.9%

934 106.9%

Iowa205 +4

1,817 +4.2%1,130 +3.4%

1,130 103.4%

Kansas123 NC

1,777 +1.9%663 +3.9%

663 103.9%

Nebraska56 -1

1,737 +2.4%295 +1.7%

295 101.7%

South Dakota92 +3

1,763 +4.6%492 +7.0%

492 107.0%

North Dakota18 NC

1,538 +4.9%84 -4.5%

84 95.5%

Michigan374 +5

1,963 +2.8%2,227 +6.8%

2,227 106.8%

Minnesota465 -2

1,632 +2.6%2,302 +2.6%

2,302 102.6%

Missouri93 -1

1,280 +3.0%361 +2.0%

361 102.0%

New York610 NC

1,779 +2.5%3,291 +3.6%

3,291 103.7%

Ohio270 +1

1,623 +1.8%1,329 +2.9%

1,329 102.9%

Pennsylvania540 +2

1,629 +0.5%2,668 +1.1%

2,668 101.1%

New Hampshire14 NC

1,672 +0.3%71 -5.3%

71 94.7%

Maine32 NC

1,556 +1.6%151 +2.7%

151 102.7%

West Virginia10 NC

1,319 +1.4%40 +2.6%

40 102.6%

Kentucky75 NC

1,301 +4.1%296 +3.9%

296 103.9%

Tennessee52 +2

1,426 -0.9%225 +4.2%

225 104.2%

Arkansas11 -1

1,139 +7.9%38 NC

38 100.0%

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Issue 7 • May 1, 2012 Progressive Dairyman 13

Feb Mar Apr May July AugJune Sept Oct Dec Jan2012

Nov Feb Mar AprJune July Aug Sept Oct Nov DecMay2009

Feb Mar Apr May June July Aug Sept Oct Nov DecJan2010

Jan2011

CA Class 1 price

Federal Class I price$9

$11$13$15$17$19$21$23$25

MARKET WATCHMARKET WATCH WILL Dairy DEMAND HOLD UP?DAIRY PRICES

Warren WagnerMarket AdviserStewart-Peterson

Apr. 2012: $15.66 High: $21.78 Low: $10.04Apr. 2012: $17.48 High: $23.84 Low: $11.97Fluid milk prices (in dollars)

Whether I’m reading report data from the USDA or getting feedback straight from the dairy farm (such as production limits or basis cuts), one word comes to mind – abundance. � e questions that follow are: “Is production completely factored into current price levels?” “Will demand hold up?”

In the April edition of the World Agricultural Supply and Demand Estimates (WASDE), the USDA raised 2012 milk production from 199.7 billion pounds to 201.1 billion pounds. If this estimate proves accurate, this will be the fi rst time ever that annual milk production hits the 200 billion pound mark. In the prior week’s Dairy Products report, February total cheese production was up 6.2 percent from one year ago, butter up 13.9 percent and dry whey up 9.2 percent. Nonfat dry milk (NDM) production hit a record 171 million pounds in February.

On the other side of the ledger, the National Dairy Products Sales Report for the week of April 7 provided a mixed picture. For the 10th time this year cheddar cheese block-plus-barrel sales exceeded the 20-million-pound mark, coming in at 20.7 million pounds. Also strong, NDM sales came in at 22.3 million pounds. In a post-holiday dropoff , butter sales totaled 2.8 million pounds, down 3.3 million pounds from the prior week. Weekly dry whey sales have been trending lower and dropped 2.3 million pounds from the prior week, coming in at 6.2 million pounds. Weekly whey sales averaged 9.4 million pounds in the month of February.

Since mid-January, Class III milk futures have been trading off of the bearish supply side news and, as of this writing, are retesting the March 5 lows. On April 11, the May Class III contract closed at $14.88 per hundredweight (cwt). � is was the fi rst time the contract closed below the $15 mark since March 6. � e contract high was put in on January 12 at $17.62 per cwt. On April 11, the May Class IV futures contract closed at $14.80 per cwt.

� e CME spot cheese trade hasn’t provided any support for milk and has virtually fl at-lined since the 15-cent drop on March 23. � e CME spot cheese block/barrel average on April 12 was $1.4475 per lb. Cheese exports remain strong and are ahead of 2011 through February. A reported 20,611.1 MT (USDA FAS) were exported in February, up 6.1 percent from January. Weekly cold storage was down 1 percent for the week of April 9. � e 132.2 million pounds in stock is a new low level for 2012.

Grade AA spot butter closed

14 Progressive Dairyman Issue 7 • May 1, 2012

Feb Mar Apr May June July Aug Sept Oct Nov DecApr2010

Feb MarMay June July Aug Sept Oct Nov Dec

Futures2012

Jan2011

Jan2012

2013

$11

$13

$15

$17

$19

$21

$23

TOTAL DAIRY EXPORTS AHEAD of LAST YEARClass III (in dollars)

10/1/11

11/5/11

12/3/11

7/2/11

8/6/11

9/3/11

1/7/12

3/3/12

4/7/124/14/12

2/4/12

4/23/11

5/7/11

6/4/11

20102011

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50 Apr. 14, 2012: $1.43 High: $2.23 Low: $1.40Butter (weekly average in dollars)

4/10/12

4/11/12

3/23/12

3/26/12

3/27/12

3/28/12

3/29/12

3/30/12

4/2/12

4/3/12

4/4/12

4/5/12

4/9/12

4/12/12

4/13/12$1.42

$1.44

$1.46

$1.48

$1.50

$1.52

$1.54Grade AA spot butter closed unchanged at $1.425 per lb on April 12, down 9.75 cents since March 23. Butter exports for February were 3,748.3 MT, up 24.9 percent month-over-month. Through February, however, 2012 butter exports lag 2011 exports by 3,848.3 MT.

MarFebOct NovApr2011

Jan2012

May June Aug SeptJuly Dec

2010

2011

$1.10$1.20$1.30$1.40$1.50$1.60$1.70$1.80$1.90 Mar. 2012: $1.39 High: $1.74 Low: $1.22Non-fat dry milk

2010

2011

10/1/11

11/5/11

12/3/11

7/2/11

8/6/11

9/3/11

3/3/12

4/14/124/7/12

1/7/12

2/4/12

4/23/11

5/7/11

6/4/11

$1.25

$1.50

$1.75

$2.00

$2.25

4/10/12

4/11/12

3/23/12

3/26/12

3/27/12

3/28/12

3/29/12

3/30/12

4/2/12

4/3/12

4/4/12

4/5/12

4/9/12

4/12/12

4/13/12

$1.480

$1.485

$1.490

$1.495

$1.500

Apr. 14, 2012: $1.49 High: $2.15 Low: $1.32Cheese (weekly average in dollars)

For the 10th time this year cheddar cheese block-plus-barrel sales exceeded the 20-million-pound mark, coming in at 20.7 million pounds.

Mar. 2012: $15.72 High: $21.67 Low: $12.92

unchanged at $1.425 per lb on April 12, down 9.75 cents since March 23. Butter exports for February were 3,748.3 MT, up 24.9 percent month-over-month. � rough February, however, 2012 butter exports lag 2011 exports by 3,848.3 MT. Weekly cold storage for butter stocks the week of April 9 was 8.427 million pounds, up 3 percent from the week prior.

Total dairy exports in February (139,756.1 MT) are down 3.29 percent from January but are ahead of 2011 through February by 10,899.8 MT. Growth in exports will be more important than ever if milk production continues to expand.

Weekly dairy slaughter has exceeded 60,000 head an impressive nine weeks in a row, but with available replacement heifers I don’t expect much in the way of U.S. herd reductions in the short term. � ere is, however, production pressure present in the form of milk plant pushbacks. Word of dumping, basis reductions and production ceilings have come from client operations out West and recently from a few here in the Midwest. Excess product and falling prices, combined with no relief yet on the feed front, means the dairy industry is in for another struggle. PD

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Issue 7 • May 1, 2012 Progressive Dairyman 15