CME: Farm Profitability Slipping

US - Cheese prices held again but milk futures for FEB-JUN dropped 13¢. The Q2 average of $16.63 is the lowest since November 17, writes Alan Levitt.
calendar icon 1 February 2012
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Butter held as well after falling in 10 of the last 13 sessions. Spot Extra Grade NDM was offered 12¢ lower to $1.36.

Milk price declines in January left farm profitability at an eight-month low. The All-Milk price was estimated at $19.20, down 60¢ from December, while feed costs were fractionally lower, according to USDA’s “Ag Prices” report released this afternoon.

The corn price increased 4¢/bushel to $5.90 and soybeans increased 20¢/bushel to $11.70, but alfalfa hay dropped $7/ton to $192.00. Feed costs compute out to $10.85 per hundred pounds of milk, leaving “Income over feed costs” of $8.35/cwt., down from $8.86/cwt. in December. This is below the 10-year average IOFC of $8.98/cwt. (see chart).

Fat tests on January milk were 3.80%, down 3 points from last January.

Bel Brands USA will build a new cheese plant in Brookings, S.D. When it opens in 2014, the 170,000-sq.-ft. factility will produce up to 22 million lbs. of cheese annually, with room to expand as market demands increase, the company says.

Further Reading

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