CME - Futures Higher on Day

US - CME spot Cheddar block and barrel markets started the week off quietly with a single, unfilled block offer left on the board. With no trades, CME Cheddar block and barrel prices settled at $1.4925/lb. (-0.25¢) and $1.4600/lb., respectively, writes Alan Levitt,26 March.
calendar icon 27 March 2012
clock icon 1 minute read

Class III futures traded mostly higher, with only APR trading down 7¢ to close at $15.61. CME spot butter and NDM markets were equally quiet today with no bids, offers or trades.

The USDA “Livestock Slaughter” report released last Friday showed dairy cow slaughter at 525,000 head year-to-date through February 2012. That is 12,000 head more than last year.

USDA’s most recent “Milk Production” report indicates that the US dairy herd has increased by 27,000 head during the same period. In other words, despite greater slaughter, the dairy herd continues to expand. This is particularly true in Region 6 which includes New Mexico and Texas and Region 3 which includes Pennsylvania and Virginia. These regions are slaughtering more cows than a year ago but their dairy herds continue to expand. However, year-to-date slaughter is down in several regions (4, 5, 9 and 10).

These regions include key milk producing states like Minnesota, Wisconsin, Michigan, California, Idaho and Washington. Clearly dairy operations are “freshening” their herds, by replacing less productive cows with younger, more productive cows, and in some states even adding to the herd.

This suggests that the US milk supply will continue to outpace the prior year until dairy slaughter outstrips the growth in the dairy herd.

Further Reading

- You can view the full report by clicking here.

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