The impact of weakening nonfat dry milk prices showed up in federal and California order minimum milk prices for June. Also, global food prices fell to their lowest level since September 2009, with dairy helping lead the decline.
While considerable uncertainty will persist for the next three months, today's USDA Grain Stocks and Acreage reports substantially increase the odds the average farm price for corn will be above $4.00/bushel for the 2015-16 marketing year, according to Darrel Good, University of Illinois Department of Agricultural and Consumer Economics.
USDA estimated the May 2015 U.S. average price paid to alfalfa hay producers at the farm level was $192/ton, up $8 from April, but still $33 less than a year earlier. According to USDA’s Acreage report, U.S. producers intend to harvest 18.3 million acres of alfalfa and alfalfa mixture dry hay in 2015, down less than 1% from 2014.
While dairy prices trend lower, the grain markets surged higher amid concerns surrounding crop conditions due to continuing rains across the Corn Belt. USDA’s Grain Stocks and Planted Acreage data will be released on Tuesday.
Despite a weaker open yesterday, Class III and Cheese futures turned positive throughout the day. Mounting chatter around hot weather forecast for the Western U.S. this weekend likely stunted some of the sell side activity, providing mild buoyancy to deferred contracts.
Ethanol producer profitability has remained surprisingly robust in 2015, in part due to distillers grains (DDGS) prices that have stayed strong relative to corn prices in recent months. Average daily production is at an all-time high.
Spot cheese fell a bit yesterday, along with all dairy spot products on the heels of the bearish Cold Storage report. July led Class III lower and remained down double digits all afternoon. But other declines were modest relative to the rally Monday.