Dairy product prices boosting milk prices – eDairyNews
Countries United States |22 mayo, 2018

Business | Dairy product prices boosting milk prices

Higher feed costs may offset margin improvement potential.

The outlook for milk prices continues to improve as dairy product prices in May have been increasing, University of Wisconsin-Madison professor emeritus Bob Cropp noted in his May “Dairy Situation & Outlook.”

If dairy product prices can hold, Cropp said average prices for May versus April on the Chicago Mercantile Exchange could average about 4 cents/lb. higher for butter, about 14 cents higher for cheddar barrels, 4 cents higher for 40 lb. cheddar blocks, 8 cents higher for nonfat dry milk and 3 cents higher for dry whey.

As a result, the May Class III price would be near $15.25, compared to $14.47 in April and the low of $13.40 in February. The May Class IV price would be near $14.45, compared to $13.48 in April and the low of $12.87 in February, Cropp added.

“Good domestic sales and dairy exports have improved the dairy stock situation and added strength to the dairy product prices,” he said.

Compared to last year, Cropp said March 31 stocks of butter were just 0.4% higher, while American cheese was slightly lower at 0.4%. Other than American, cheese stocks were 14.2% higher, resulting in 5.2% higher total cheese stocks, he noted.

According to Cropp, the strength in nonfat dry milk prices is surprising, since stocks were still 20.9% higher than a year ago. Dry whey stocks, which have been relatively high, were 3.5% lower than a year ago, he added.

The price of butter, cheese, nonfat dry milk and dry whey remain lower than and competitive with world market prices, Cropp noted, adding that U.S. dairy exports set a record high in March on a total volume basis, surpassing the previous record high set in March 2014.

Compared to March2017, butterfat exports were 180% higher, cheese 9% higher, nonfat dry milk/skim milk powder 38% higher and dry whey 19% higher. March exports as a percentage of milk production on a total solids basis was 17.3%, compared to 14.1% a year ago.

“The outlook for dairy exports appears positive for the immediate months ahead,” Cropp said, adding that milk prices will continue to strengthen and may even top out in October or November.

“The degree of strength will continue to depend upon the level of milk production and dairy exports,” he said. “The summer weather, quality of forages harvested and the condition of the corn and soybean crop that will impact feed costs will have a bearing on milk production this summer, fall and into winter.”

Further, Cropp said the U.S. Department of Agriculture’s report for April milk production was positive for milk prices. Compared to April 2017, milk production increased just 0.6%. Milk cow numbers declined slightly, down 2,000 head from March — the second consecutive monthly decline. April milk cow numbers were just 8,000 head, or 0.1%, higher than a year ago. The April increase of 0.5% in milk per cow showed that this number increased much less than the normal trend.

The April milk production report also revealed that major dairy states in the Midwest and eastern U.S. are decreasing production. However, Idaho, Texas, Colorado, Kansas and Utah showed strong increases.

Cropp said it now looks like the Class III price could reach close to $16/cwt. in June and the mid- to high $16s by July and for the remainder of the year. As such, the average for the year could end up near $15.60/cwt., compared to $16.17 last year. He said the Class IV price could be in the low $15s in June and then in the mid- to high $15s for the remainder of the year, even reaching $16 by October; this would put the average near $14.70, compared to $15.16 last year.

Cropp said dairy margins will improve but added that these improvements are now being dampened some by higher feed prices.

By: Krissa Welshans 1

Source: Feedstuffs

Link: http://www.feedstuffs.com/markets/dairy-product-prices-boosting-milk-prices

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