Dairy Market Update: May 2013 Dr. Craig Thomas Michigan State University Extension Dairy Farm...
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Transcript of Dairy Market Update: May 2013 Dr. Craig Thomas Michigan State University Extension Dairy Farm...
Dairy Market Update:May 2013
Dr. Craig ThomasMichigan State University Extension Dairy Farm Business Management & Milk
Marketing EducatorSanilac, Huron, Tuscola, St. Clair, Lapeer, Saginaw, Genesee, Macomb, Oakland, Washtenaw, Wayne,
& Monroe Counties
Benefactor ($200)Active Feed Co.
Major Sponsor ($75-$100)
Contributor ($50)
Exchange State Bank
Eastern Michigan Bank
Thumb Veterinary Services
Crop Production Services-Sandusky & Deckerville
2013 Sponsors
Dairy Farmers of America-Steve Steely
Graff Chevrolet/Buick, Inc.Sanilac Drain & Tile Co.
Secher Site Specific LLC GreenStone FCS
+ $1.87 Class III vs. Apr 2012 ($14.68, +$2.91 vs. Apr average)
April Milk Prices
+ $3.30 Class IV vs. Apr 2012 ($14.80, +$3.30 vs. Apr average)
$18.10
+$0.35
$17.59+$0.66
USDA Michigan Mailbox
Jan 2013:
$19.81 up $0.77
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
+0.3% Top 23 States versus April 2012
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
Tenth time in past eleven months
below trend increase.
Record 200.324 billion lbs.for 2012!
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
BUT…
Q-1 2012 U.S. milk production was up
4.2% vs. 2011!
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
Michigan +1.3%versus April 2012.
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
Seqestration!Milk Production
ReportNo cow numbers!No milk per cow!
“administrative data” only
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
M:F ratio <2.0 for 27of past 29 months.
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
April Milk:Feed Price Ratio
All-Milk: $19.30 (+0.20)
Corn: $6.67 (-$0.46)
Soybeans: $14.20 (-$0.40)
Alfalfa Hay: $215 (-$4.00)
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
Feed costs up 3.8% vs.April 2012 ($11.92 to $12.38).
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
USDA report on alfalfa hay and alfalfa hay mixtures:
U.S.: -34% vs. last May 1st
Hay stocks declined by 50% or more in nine states vs. last year
(MI, MN, NY, OH, VT, WI).
Little indication 2013 crop will be large enough to replenish stocks.
Hay acreage has fallen to second lowest level on record.
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
IOFC up 25.8% (+$1.74/cwt) vs.
April 2012 ($8.51 to $6.77).
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
IOFC up 5.5%vs. March 2013 (+
$0.47).
+0.2% Nationally versus April 2012U.S. Production 2012 +2.1% vs. 2011
2013 +0.1% vs. 2012(’99-’12 ave. = +1.6%)
April all-milk price+$2.50/cwt vs. April 2012.
Above Trend For Apr
April: +11.9% vs. April 2012+1.1% vs. March
April +28,600 hd vs. April 2012
2012 +187,200 hd vs. 2011!YTD +56,200 hd (as of 4/30/13)
Jan (296.9) highest monthly slaughter number since 1986; year
of the whole-herd buyout.
Cull Rate AboveLong Term Average (29.0%)+4.1%
California:
~100 dairy farms are closing their doors permanently each year.
Cull Rate AboveLong Term Average (29.0%)+4.1%
U.S. cull cow prices down
1.5% vs. March 2012($82.90 vs. $84.20).
Cull Rate AboveLong Term Average (29.0%)+4.1%
What will thefuture hold?
Cull Rate AboveLong Term Average (29.0%)+4.1%Unusual circumstances moving
forward: Steers >$ vs. replacement heifers xbred calf likely more value than
purebred heifer Less sexed semen usage Holstein heifers being sold in lots
destined for the feedlot Strong beef prices continue to fuel
unprecedented dairy cull rates Beef industry will continue to pull dairy
to beef Thus, dairy herd will eventually shrink
and may be more difficult to grow in the future.
Going Strong…Better! No??!!2012 vs. 2011 +1.7%; 2013 vs. 2012
+0.8%(1996-12 average = +1.6%)
Cheese: 1996-12 average = +2.5%2012 vs. 2011 +1.2%; 2013 vs. 2012 +0.1%
Going Strong…Better! No??!!2012 vs. 2011 +1.7%; 2013 vs. 2012
+0.8%(1996-12 average = +1.6%)
Cheese: 1996-12 average = +2.5%2012 vs. 2011 +1.2%; 2013 vs. 2012 +0.1%
Total commercial disappearance set all-
time monthly record for Jan in Jan;
but down 0.7% in Feb vs. Feb 2012!
Going Strong…Better! No??!!2012 vs. 2011 +1.7%; 2013 vs. 2012
+0.8%(1996-12 average = +1.6%)
Cheese: 1996-12 average = +2.5%2012 vs. 2011 +1.2%; 2013 vs. 2012 +0.1%
2013 vs. 2012 (YTD Jan-Feb)
American Cheese: +1.8% (+2.3%)
Other Cheese: +1.9% (+2.5%)
Butter: +10.2% (+2.8%)
NFDM: -18.7% (+5.3%)
Fluid Milk: -4.4% (Feb)
Going Strong…Better! No??!!2012 vs. 2011 +1.7%; 2013 vs. 2012
+0.8%(1996-12 average = +1.6%)
Cheese: 1996-12 average = +2.5%2012 vs. 2011 +1.2%; 2013 vs. 2012 +0.1%
March fluid milk 38th
consecutive month ofdeclining sales versussame month last year.
American Cheese (+5.3% Apr vs. Apr 2012, +35.2 M lbs. vs. 5/1/12)
Total Cheese (+4.5% Apr vs. Apr 2012, +48.1 M lbs. vs. 5/1/12)
5/28/13 Close = $1.7388May 07-12 Average = $1.5505
American Cheese (+5.3% Apr vs. Apr 2012, +35.2 M lbs. vs. 5/1/12)
Total Cheese (+4.5% Apr vs. Apr 2012, +48.1 M lbs. vs. 5/1/12)
May 07-12 Average = $1.5505
Total Cheese Inventory
Above 1.0 billion pounds fifthconsecutive month!
5/28/13 Close = $1.7388
American Cheese (+5.3% Apr vs. Apr 2012, +35.2 M lbs. vs. 5/1/12)
Total Cheese (+4.5% Apr vs. Apr 2012, +48.1 M lbs. vs. 5/1/12)
May 07-12 Average = $1.5505
Cheese Inventories
All-time historical highs!
5/28/13 Close = $1.7388
American Cheese (+5.3% Apr vs. Apr 2012, +35.2 M lbs. vs. 5/1/12)
Total Cheese (+4.5% Apr vs. Apr 2012, +48.1 M lbs. vs. 5/1/12)
May 07-12 Average = $1.5505
2013 cheese production (Jan-Mar):
American cheese 2.7% (1.9%)Total cheese +1.7% (2.7%)
vs. Jan-Mar 2012.
5/28/13 Close = $1.7388
+22.2% versus Apr 2012Butter
May 07-12 Average = $1.5062
5/28/13 Close = $1.5450
+22.2% versus Apr 2012Butter
May 07-12 Average = $1.5062
Butter Inventory
All-time historical high!
5/28/13 Close = $1.5450
+22.2% versus Apr 2012Butter
May 07-12 Average = $1.5062
2013 butterproduction (Jan-Mar)
+4.4% (2.3%) vs. Jan-Mar 2012.
5/28/13 Close = $1.5450
Dairy Exports
Dairy trade surpluses 37 consecutive months!
FY-2013 (Oct-Mar): $918.1 M!
FY-2013: October-March
U.S. dairy exports equaled:CY-2011, 13.3%; CY-2012, 13.2%.
U.S. Dairy Trade Summary: March, 2013
Trade Exports vs.
Current Exports Current Surplus/ Same Month
Month Exports1 Last Year1 Imports1,2 Deficit1 Previous Year
Mar '13 $499.7 $484.0 $293.0 $206.7 3.2%
Feb '13 $439.3 $437.0 $238.2 $201.1 0.5%
Jan '13 $444.4 $425.5 $288.0 $156.4 4.4%
Dec '12 $419.9 $430.0 $319.0 $100.9 -2.3%
Nov '12 $400.1 $438.0 $299.0 $101.1 -8.7%
Oct '12 $412.9 $411.0 $261.0 $151.9 0.5%
FY-YTD3 $2,616.3 $2,625.5 $1,698.2 $918.1
CY-YTD4 $1,383.4 $1,346.5 $819.2 $564.2
U.S. Milk5 13.1%
March13.5% of total U.S. milk
solids production!
Jan-Mar13.1% (12.9%)
FY-2013: October-March
U.S. dairy exports equaled:CY-2011, 13.3%; CY-2012, 13.2%.
March24th time in past 25
months exports exceeded $400 million!
Dairy Exports
CY-2013 (Jan-Mar)Exports as a % of total U.S.
production:
NFDM/SMP: 41% (44%)
Cheese: 5.6% (5.3%)
Butter: 5.9% (5.2%)
Dry Whey: 46% (46%)
Lactose: 72% (68%)
Dairy Exports
2011-2012One of every 8 tanker loads of raw milk was ultimately exported!
Dairy Exports2013 OutlookMilk production growth in Oceania,
EU, and U.S., unlikely to satisfy world dairy product demand.
China expected to increase dairy imports by 14%.
New Zealand milk prdn down >16% in Mar; -2.3% in Feb.YTD up 4.8% vs. 2012; Australia -1.6% vs. 2012
(drought driven). “Offerings are tight…servicing existingaccounts on the books and having little extra for other demand.”
EU milk prdn down every month vs. last year since July 2012;weak 2013 spring flush.
Thus, no significant finished product stocksin EU or Oceania to buffer markets moving into
remainder of 2013.
U.S. dairy product prices remain below international prices.Higher international demand has softened demand
(at least in the short term); however, look forstronger prices in second half of 2013.
Dairy Exports
Big 5 Dairy Exporters
USDEC predicts will be down >1% in milk prdn for first half of 2013; a
shortfall of 1.6 M tons of milk (~3.5 B lbs).
Dairy Exports
USD Strengthening!
Dairy Exports
Tom SuberUSDEC president
“Global economic signs are starting tomove in a more positive direction,
demand and consumption will continuerising, and world prices are expected
to come more in line with U.S. prices.”
Dairy Exports
China“will be a key player in determining thehealth of global dairy markets given itsdemand for an ever-growing share of
dairy supplies.”+8.1% GDP growth in 2013 (+7.5% in 2011)
>5% annual growth in dairy consumption!
Dairy Exports
World“…there are currently no significant
surplus stocks in the United States orthe EU to buffer markets. Consequentlyglobal economic and population growth
are expected to keep driving importdemand which could put upward pressureon dairy prices particularly towards the
second half of 2013.”
Dairy Exports
Long Term OutlookBright, but loaded with risk.
U.S. Dairy Export Council“The United States cannot absorb backinto the domestic market 13% of annual
milk solids produced in this country. Andas we produce more milk, most of it hasto go to international customers because
domestic consumption is growing slowly...”
Retail Food PricesMarch
Whole MilkCPI = +1.9%
Price: -$0.068/gal
CheeseCPI = -1.3%
Price: -$0.109/lb (p) +$0.077/lb (n)
ButterCPI = +1.0%
Price: NA
All-FoodCPI = +1.5%
DairyCPI = -0.5%
MPFECPI = +1.2%
Ice CreamCPI = +0.0%
Price: -$0.001/half gal.
Month/ Last Report CME Futures 2007-2012 Class III Difference vs. Difference Change Since Ave. Basis Potential MI
Year 4/29/2013 5/28/2013 Average Class III Ave. (Last Report) Last Report 2005-12 "Mailbox"1
Jan '13 $18.14 $18.14 $15.26 $2.88 $2.88 $0.00 $1.66 $19.80
Feb '13 $17.25 $17.25 $14.64 $2.61 $2.61 $0.00 $1.45 $18.70
Mar '13 $16.97 $16.93 $15.24 $1.69 $1.73 ($0.04) $0.89 $17.82
Apr '13 $17.26 $17.59 $14.86 $2.73 $2.40 $0.33 $1.01 $18.60
May '13 $18.34 $18.51 $15.13 $3.39 $3.22 $0.17 $0.96 $19.47
Jun '13 $18.95 $17.88 $16.46 $1.42 $2.49 ($1.07) $0.18 $18.06
Jul '13 $19.16 $18.32 $16.90 $1.42 $2.26 ($0.84) $0.43 $18.75
Aug '13 $19.13 $18.67 $17.16 $1.52 $1.98 ($0.46) $0.71 $19.38
Sep '13 $19.10 $18.93 $17.13 $1.80 $1.97 ($0.17) $1.07 $20.00
Oct '13 $18.90 $18.80 $17.43 $1.37 $1.47 ($0.10) $1.14 $19.94
Nov '13 $18.63 $18.50 $17.36 $1.14 $1.27 ($0.13) $1.41 $19.91
Dec '13 $18.26 $17.98 $16.82 $1.16 $1.44 ($0.28) $1.25 $19.23
Jan '14 $17.87 $17.49 $15.26 $2.23 $2.61 ($0.38) $1.66 $19.15
Feb '14 $17.65 $17.30 $14.64 $2.66 $3.01 ($0.35) $1.45 $18.75
Mar '14 $17.35 $17.15 $15.24 $1.91 $2.11 ($0.20) $0.89 $18.04
Apr '14 $17.30 $17.16 $14.86 $2.30 $2.44 ($0.14) $1.01 $18.17
May '14 $17.10 $17.12 $15.13 $2.00 $1.98 $0.02 $0.96 $18.08
June '14 $16.85 $17.07 $16.46 $0.61 $0.39 $0.22 $0.18 $17.25
July '14 $16.02 $17.00 $16.90 $0.10 ($0.88) $0.98 $0.43 $17.43
Aug '14 $16.02 $17.00 $17.16 ($0.15) ($1.14) $0.98 $0.71 $17.71
Sep '14 $16.02 $17.00 $17.13 ($0.13) ($1.11) $0.98 $1.07 $18.07
Oct '14 $16.25 $16.35 $17.43 ($1.08) ($1.18) $0.10 $1.14 $17.49
Nov '14 $16.02 $16.25 $17.36 ($1.11) ($1.34) $0.23 $1.41 $17.66
Dec '14 $16.02 $16.25 $16.82 ($0.57) ($0.80) $0.23 $1.25 $17.50
Jan '15 $15.56 $15.57 $15.26 $0.31 $0.30 $0.01 $1.66 $17.23
Feb '15 $15.51 $15.51 $14.64 $0.87 $0.87 $0.00 $1.45 $16.96
Mar '15 $15.46 $15.24 $0.22 $0.89 $16.35
Apr '15 $15.41 $14.86 $0.55 $1.01 $16.42
2013 $18.34 $18.13 $16.20 $1.93 $2.14 ($0.22) $1.01 $19.14
Next 12 mo. $18.35 $18.06 $16.20 $1.86 $2.19 ($0.33) $1.01 $19.07
2014 $16.71 $16.93 $16.20 $0.73 $0.51 $0.22 $1.01 $17.941Potential mailbox price for MI based on 2005-2012 basis (i.e., basis calculated as USDA MI mailbox price minus Class III price).
Class III
Current Class III futures prices are averaging +$1.93 (2013), +$1.86 (next 12 mos.), +$0.73 (2014) versus
the 2007-2013 averages.
Class III / Cheese
Next 12 mos: $18.55 ($18.06) (-$0.49)
4/29/13
2013: $18.13 ($18.52) (-$0.39)
2014: $16.93 ($16.85) (+$0.07)
Class III
Current Class III futures prices are averaging +$1.93 (2013), +$1.86 (next 12 mos.), +$0.73 (2014) versus
the 2007-2013 averages.
Where’s the Market Headed?
Cheese prices. 5/29/13Ave.
$1.7388
4/29/13$1.7663 block/barrel
cheese price.
Where’s the Market Headed?
Cheese prices. 5/29/13Ave.
$1.7388
Decrease of$0.0275
Where’s the Market Headed?
Where’s the Market Headed?
Where’s the Market Headed?USDA Forecast
May
Milk production:2013
201.8 B lbs. +0.7%Milk consumption:195.0 B lbs. +0.9%
2013 prices:Class III: $17.80-$18.30 (-5¢)
Class IV: $18.20-$18.80 (+10¢)
All-Milk: $19.5-$20.00 (+5¢)
Cheese: $1.745-$1.795 (+1¢)
Butter: $1.570-$1.650 (+1¢)
NFDM: $1.590-$1.630 (+0.5¢)
Dry whey: $0.580-$0.610 (-2.5¢)
PricesSpring flush ending soon; major heat in 2013?
Domestic consumption weak, exports remain strong;push on to produce more milk, esp. w/lower feed $;will U.S. dairy herd shrink? Will higher prices and
stronger USD limit upside?
Cheese: flat then up? $2.00 by mid-summer?
Butter: flat then up? $2.00 by mid-summer?
Class III & IV: flat near term; ave. near or aboveUSDA top?
Will cow numbers fall;international demand remain strong?
Where’s the Market Headed?
LGM-DairyFY-2014 budget calls for increase in
LGM subsidies from $20 M to $100 M.
DSA likely component of newFarm Bill…but when?
Where’s the Market Headed?
Long Range Weather Forecast
Jun-Jul-Aug Temperature
Long Range Weather Forecast
Aug-Sep-Oct Temperature
Long Range Weather Forecast
Jun-Jul-Aug Precipitation
Long Range Weather Forecast
Aug-Sep-Oct Precipitation
“Prediction is verydifficult, especially if it is about the future.”
-Neils Bohr
Where’s the Market Headed?
Where’s the Market Headed?
“It doesn’t matter howsmart you are unlessyou stop and think.”
-Thomas Sowell
Craig Thomas
Web Site
www.msu.edu/~thomasc
News
Web Site
msue.anr.msu.edu
AgricultureDairy
2013Ag Market Updates
Live over the Net!Send me your e-mail address to receive advance notification of live Ag Market
Update webinars.
Month Location Day Date
February Sandusky1,2,3 Tuesday 2/26/2013
April Sandusky1,2,3 Tuesday 4/30/2013
June Sandusky1,2,3 Tuesday 6/25/2013
August Sandusky1,2,3 Tuesday 8/27/2013
October Sandusky1,2,3 Tuesday 10/29/2013
December Sandusky1,2,3 Tuesday 12/17/2013
Craig [email protected]
http://breeze.msu.edu/craigthomas
The End