Cheese softens, but butter bounces

Daily CME Cash Trading on Friday, May 2, 2014











Cheddar barrels



Cheddar blocks



NFDM Grade A



Butter Grade AA




Dairy Margin Watch: Margins mixed, but strong

Dairy margins were mixed the final two weeks of April, weakening slightly in Q2 2014, but strengthening for the remainder of the year, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC.

Margins remain strong from a historical perspective, at the 90th percentile through Q3 2014, while approaching the 90th percentile in deferred periods. 1Q 2015 margins were down slightly over the past two weeks.

Milk prices have been generally stronger since the middle of April, although feed costs have likewise moved higher. USDA reported the April 2014 Class III milk price at a new record high $24.31/cwt., up 98¢ from March. The April preliminary all-milk price of $25.50/cwt. also represents a record high.

Nearby margins have been pressured slightly as spot cheese prices have slipped more than 28¢/lb. since the beginning of April, which weighs on the Class III price.

Feed costs have moved higher during April, with corn prices continuing to draw support from the slow pace of planting progress. Soybean meal prices have marched to new highs, drawing support from tight old-crop supplies.



Midwest milk-feed price ratios improve

Higher milk prices and lower alfalfa hay prices – relative to their counterparts in other regions of the country – helped push April milk-feed price ratios higher in the Midwest, in contrast to a slight decline seen nationally.

Compared to a month earlier, the April index rose across four Midwest states (Michigan, Minnesota, Ohio and Wisconsin), with only Iowa seeing a slight decline, according to Dairy Market News. Ratios ranged from a high of 2.90 in Ohio to a low of 2.61 in Iowa. The national average for April was 2.44.

The index – representing pounds of 16% commercially mixed dairy feed equal in value to 1 lb. of whole milk – is based on current prices for a ration of 51% corn/8% soybeans/41% alfalfa hay.

Across the region, average alfalfa hay prices were $25 (Minnesota) to $56 (Michigan) per ton below the national average of $206/ton. Meanwhile, average milk prices were at or slightly above the $25.50/cwt. national average.


Next WASDE to take first look into 2015

The next World Agricultural Supply and Demand Estimates (WASDE) report, to be released May 9, will present USDA's initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for the 2014/15 marketing year, as well as the first calendar-year 2015 projections for U.S. livestock and dairy.

One other change regarding dairy will be elimination of “Commodity Credit Corporation (CCC) net removals” in the monthly ”Milk Supply & Use” table. With the end of the Dairy Product Price Support Program, that category will be replaced with "CCC Donations" to represent government purchases – if any – under the Farm Bill’s Dairy Product Donation Program.


California Dairies, Inc. elects directors

The member-owners of California Dairies, Inc. (CDI), the nation’s second largest dairy processing cooperative, voted in six new members and two incumbents to its 16-member board recently. All will serve a three-year term.

The six newly elected board members are: Brian Medeiros, Charles DeGroot, Frank Konyn, Justin Gioletti, Paul Pacheco and Steve Scheenstra. Reelect incumbents are John Moons and Brian Pacheco.

CDI board executive committee elections will be held at the May board meeting.

CDI, the largest member-owned milk marketing and processing cooperative in California, produces 47% of California’s milk. Co-owned by more than 430 dairy producers who ship 18 billion lbs. of milk annually, CDI manufactures butter, fluid milk products and milk powders. Visit


$3.8 million paid to MMPA members

Michigan Milk Producers Association (MMPA) made cash payments of $3.8 million in equity retirements in April. These cash payments represent the retirement of the 2005 equities. This is in addition to the $2 million in cash patronage from 2013 earnings paid to members earlier this year. Combined, MMPA has paid $5.8 million in addition to the monthly milk checks to its dairy farmer members in the first four months of 2014.

During fiscal year 2013, MMPA members earned $26 million in total premiums. These premiums are a combination of quality, volume, over-order premiums and a “13th” milk check and serve as a reflection of MMPA’s financial strength. MMPA has achieved these benchmark goals through earnings from the association’s plant operations and from its bulk milk marketing operations.

Michigan Milk Producers Association is a member owned and operated dairy cooperative serving approximately 2,000 dairy farmers in Michigan, Indiana, Ohio and Wisconsin.


Comments sought on Dairy Market News reporting changes

USDA’s Ag Marketing Service is seeking comments on reporting guidelines and market coverage In its weekly Dairy Market News (DMN). Due to recent industry requests, AMS is particularly interested in adding and/or adjusting market coverage for selected dairy products. Three key areas of interest are:

• adding market coverage of skim milk powder (SMP)

• including resale prices in market price series

• evaluating lactose mesh size in market price series

A list of individual reports and the general Working Guidelines can be found on the DMN website along with the most recent DMN reports.

Comments should be faxed, emailed, or mailed by May 23 to either:

• Joseph Gaynor Director, Dairy Market News 1400 Independence Ave., SW, 0231-2977 Washington, DC 20250-0225 Phone: (202) 720-9351 Fax: (202) 720-4844

• Butch Speth National Supervisor, Dairy Market News 2920 Marketplace Drive, STE 202 Fitchburg, WI 53719-5337 Phone: (608) 278-4152 Fax: (608) 278-4141


April Credit Managers' Index improves (a little)

 With the advance of spring and the warmer weather, there are signs the economy is perking up, according to the National Association of Credit Management’s monthly economic report. For now, the favorable factors in NACM’s April report of the Credit Managers’ Index (CMI) are a source of encouragement, but the unfavorable factors show strains on those that owe money.

The CMI monitors "positive" and “negative” factors in U.S. manufacturing and service sectors. Positive factors include sales, new credit applications and amount of credit extended. Negative factors include rejections of credit applications, accounts placed for collection, and dollar amount beyond terms.

Favorable factors comprising the April CMI improved, led by sales, new credit applications, dollar collections and amount of credit extended.

However, changes in some unfavorable factors remain a concern, including rejections of credit applications, indicating that while credit applications are up, those applying for credit are not in great shape. Consumer attitude is still a problem, and the data on business expansion remain weak, the report said.



Midwest economic growth slower in February

The Midwest Economy Index (MEI) declined in February, indicating that regional economy was growing at a rate consistent with national economic growth.

The index is a weighted average of 129 state and regional indicators encompassing the five states in the Seventh Federal Reserve District (Illinois, Indiana, Iowa, Michigan and Wisconsin). The index measures growth in non-farm business activity based on indicators of four broad sectors of the Midwest economy: 1) manufacturing, 2) construction and mining, 3) services, and 4) consumer spending.

February’s pace of manufacturing activity decreased in Illinois, Iowa, Michigan and Wisconsin, but increased in Indiana. The construction and mining sector’s contribution was lower in Indiana and Iowa, but higher in Michigan and Wisconsin, and unchanged in Illinois. The pace of service sector activity decreased in Illinois, Indiana, Michigan and Wisconsin, but was unchanged in Iowa. Consumer spending indicators were, on balance, down in all five states.

MEI historical data and background information are available at