Better growing conditions over summer than during a bad spring is likely a factor in the dip of 3.2% in the GlobalDairyTrade auction last week, economists say. 

Fonterra has revised its 2016-17 season milk collection forecast to a 5% decline on last year, up from the previous forecast of a 7% fall.

Whole milk powder (WMP) prices at last week’s auction fell 3.7% to $3189/t, with fat-based products continuing to outperform, says Westpac economist Sandra Drought.

While WMP prices have fallen to the lowest level since October last year, they are still 55% higher than mid-2016.

“Overall, dairy markets have found themselves in a much more balanced position this year, as last year’s retrenchment in global supply begins to taper off, while demand has remained steady.”

Drought says Westpac expects global prices to ease a bit more in coming months as the stabilisation in global supply materialises.

“We continue to forecast a farmgate milk price of $6.20/kgMS this season, and have pencilled in $6.50/kgMS for next season,” says Drought.

“With most of this season’s production already sold, there would need to be a sharp decline in prices to create material downside for this season’s forecast, but next season’s forecast is a different story.”

She says the NZ dollar has been resilient this year, with the NZD/USD now about 71 cents. But with rate hikes on the cards in the US this year and next, the US dollar is expected to strengthen, and push the NZD/USD lower.

“We’re forecasting the NZD/USD to fall to 67 cents by year end, and track a bit lower in 2018,” she says.

In NZ, production conditions in most regions have been much more favourable over the past few months following a “horrid” spring.

“Fonterra’s milk collections in January were down only 1.4% from the previous year, a far cry from the 8.3% decline recorded in October, and losses for the season to date have been pared back to 4.9%.

“And as a result of better conditions, Fonterra has upgraded its forecast for the season’s milk production, from a loss of 7% to 5%. Consequently, they bumped up their expected offerings on the GlobalDairyTrade platform over the next 12 months by 1.6%, which looks to have been a key catalyst behind last week’s fall in prices.”

The trends in European production are crucial to the outlook for global supply, she says.

“With farmgate prices rising in recent months, we should see some supply response as the year goes on, although environmental constraints especially in the Netherlands may hold back some production. Large stockpiles of skim milk powder also need to be released onto the market at some stage.”

ASB senior rural economist Nathan Penny says an improved NZ production outlook led to the price decline last week.

Nationwide production for all dairy companies is forecast to decline 3% on last season – a 5% decline was previously forecast.

“Moreover, this season’s weather risks have largely receded. With recent rain in most parts of the country and autumn around the corner, the improvements in production are likely to be maintained over the remainder of the season,” he says.

“As a result, we expect prices may soften further over coming auctions. Over a longer period, we expect WMP prices, for example, to remain well-supported in the low US$3000s.”

No change to forecast payout

Fonterra last week said it was sticking to its forecast farmgate milk price of $6.00/kgMS announced in November.

When combined with the forecast earnings per share range for the 2017 financial year of 50-60 cents, the total payout available to farmers in the current season is forecast to be $6.50-$6.60 before retentions.

Fonterra is required to consider its forecast farmgate milk price every quarter as a condition of the Dairy Industry Restructuring Act.

Fonterra chairman John Wilson says the cooperative is confident this forecast is at the right level, following the 75 cent rise in its forecast farmgate milk price in November last year.

“The global outlook for dairy remains positive. Since November, the global market for commodity dairy products has remained relatively balanced and we expect global prices to continue to hold or gradually increase over the back half of this season, a view shared by most global analysts,” says Wilson.

Fonterra also announced that it would increase the monthly advance rates it pays to farmers. The rate for February, paid in March, has increased to $4.85/kgMS.

“Our confidence in the global dairy market at this stage of the season, combined with the strength of our cooperative, has enabled us to increase the monthly advance rates more than we normally would at this time of the year,” says Wilson.

Fonterra’s Global Dairy Update for February reported the co-op’s New Zealand milk collections were showing signs of recovery. Originally expected to be down 7% for the season, the NZ collections forecast has now improved to a 5% decline on last season.

Source: Rural News

Class III milk futures at the Chicago Mercantile Exchange resumed their recent trend, closing lower on profit taking, demand uncertainties, and the higher dollar, which makes U.S. goods more expensive on the export market. March was down $.23 at $16.04, April was $.27 lower at $15.89, May was down $.31 at $15.90, and June was $.20 lower at $16.16.

Cash cheese blocks were $.0575 lower at $1.49. There were four loads sold, including two at $1.49. Barrels were down $.06 at $1.465. There were three loads sold, one at $1.465 and two at $1.47. The last unfilled bid was on one load at $1.46.

Butter was up $.0575 at $2.2325. There were two loads sold, one at $2.225 and one at $2.23. The last unfilled bid was on one load at $2.2375. The last uncovered offer was for six loads at $2.30.

Nonfat dry milk was $.0325 lower at $.795. There were two loads sold at $.795. The last unfilled bid was on one load at $.79. The last uncovered offer was for one load at $.8075.

The USDA says butter for the week ending February 25th averaged $2.14 per pound, down $.024. Cheddar cheese came out at $1.67, $.041 lower. 500 pound barrels averaged $1.68, up $.018. Dry whey was pegged at $.504, $.01 higher. Nonfat dry milk averaged $.955, down $.027.

California’s Department of Food and Agriculture reports nonfat dry milk for the week ending February 24th averaged $.9619, down $.048 on the week. Sales of 5,072,529 pounds were up 366,811 from the week before.

At the Springfield Livestock Marketing Center’s special dairy sale in Missouri on Tuesday, the USDA says supply and demand were moderate, with 10% of the run springer heifers (a heifer that is getting close to calving), 10% bred heifers, 30% open heifers, 10% fresh and milking cows, 2% bred and springer cows, and 7% baby calves. The rest of the run was made up of steers, bulls, and slaughter cows. Receipts were reported at 694 head, compared to 655 a month ago and 907 a year ago.

Supreme heifers, bred seven to nine months, brought $1,375 to $1,650 per head, with an incidence of $1,875, and crossbreds ranged from $1,225 to $1,435. Medium springers ranged from $700 to $980 with a few Jerseys at $900 to $935 and crossbreds at $800 to $900. Supreme heifers bred six to nine months were reported at $1,300 to $1,490 with approved quality at $1,010 to $1,285, including a Jersey that brought $950, and a few crossbreds which sold at $1,025 to $1,700. Approved heifers bred one to three months came out at $1,000 to $1,260 with an individual Jersey at $1,000. Approved heifers weighing 500 to 600 pounds brought $680 to $750 with a 565 pound Jersey at $820 and crossbreds at $680 to $770. Supreme quality fresh and milking replacement cows sold at $1,400 to $1,575 with an individual crossbred at $1,475 and medium quality ranged from $825 to $1,075 with a few crossbreds at $900 to $1,705. Holstein heifer baby calves were reported mostly at $250 to $260 and Holstein baby bulls primarily brought $95 to $130. Jersey bulls sold at $40 to $55.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were steady to higher, rebounding slightly from the recent steep losses. March was up $.17 at $16.27, April was $.15 higher at $16.16, May was up $.16 at $16.21, and June was $.01 higher at $16.36.

Cash cheese blocks were up $.0025 at $1.5475. The last uncovered offer was for one load at $1.55. Barrels were $.0375 at $1.525. There were 14 loads sold, including seven at $1.495 and three at $1.525.

Butter was up $.02 at $2.18. There were seven loads sold, including two at $2.18. The last unfilled bid was on two loads at $2.175. The last uncovered offer was for one load at $2.18.

Nonfat dry milk was $.0025 higher at $.825. There were two loads sold at $.825. The last unfilled bid was on two loads at $.825. The last uncovered offer was for one load at $.84.

The USDA’s dairy price index for January was up 94.0%, up 0.5% from December, but 1.9% below a year ago. The price received for all milk was $18.90 per hundredweight, up $.10 on the month and $2.80 on the year.

Source: Brownfield Ag News

The USDA says producers paid more and made less in January than in December.

The index of prices paid increased 1.9% on higher costs for feeder cattle, feeder pigs, interest, and other services, which canceled out lower prices for milk cows, repairs, hay, forages, and complete feeds. Prices received declined 1.6% because of lower prices for market eggs, turkeys, tomatoes, and cauliflower, offsetting gains in cattle, hogs, broiler chickens, and corn.

Both indices are below year ago levels, received by 2.9% and paid by 0.2% The USDA’s ag prices report for February is out March 30th.

Source: Brownfield Ag News

Recent USDA reports have mixed news for dairy producers. Economist Mark Stephenson says, “We were up about two-and-a-half percent in milk production again, and we had a cold storage report that showed that we had some build up of cheese stocks and, you know, butter stocks that were a little bit bigger than we might have expected so those things are certainly putting some downward pressure on it.”

Stephenson directs the Center for Dairy Profitability at the University of Wisconsin-Madison. He tells Brownfield the long-term outlook is better because of export markets. “All of the major exporters of the world, meaning Oceana and the European Union, and countries in South America are all well down in milk production and we’re working down world stocks, and since we play in a world market, that’s going to be the bigger long-term story.”

He says some producers are concerned about reopening trade agreements and getting a worse deal. “I don’t think it’s going to be negative for us so I’m still thinking that we have a pretty good size role to play, but if we don’t, if we start to get shut out of those markets, then we’ve got way too much dairy product to be consuming domestically.”

Stephenson forecasts Class III milk prices will level off and Class IV will hit the 15 dollar mark within three months because of butter and nonfat dry milk demand.

Stephenson expects the best milk prices in the 4^th quarter of this year.

Source: Brownfield

A dairy analyst says the dairy industry could be in for a bumpy ride this year. During last week’s Ag Outlook Forum, the USDA projected milk prices would increase 11 percent.

University of Missouri’s Scott Brown says the year is starting off with a lot of optimism. “I believe that the slowdown in production expansion in Oceana – New Zealand and Australia – and even the EU who has slowed down substantially in terms of milk production, will create opportunity for us to export dairy products in 2017,” he says.

But, he tells Brownfield the latest milk production report showed a year-over-year increase of nearly 3 percent. “We’re going to have to think about how that all balances,” he says. “Perhaps some of the very bullish forecasts that are out there might get trimmed a little as we move ahead.”

Brown says it is still early in the year and the projections for milk prices could still change a lot. “We’re so inelastic on the demand side it doesn’t take much to move us from low prices to high prices,” he says.

Source: Brownfield

Class III milk futures at the Chicago Mercantile Exchange were pressured by follow through selling and demand uncertainties. March was down $.17 at $16.10, April was $.31 lower at $16.01, May was down $.43 at $16.05, and June was $.39 lower at $16.35.

Cash cheese blocks were $.03 lower at $1.545. There was one load sold at $1.545. The last uncovered offer was for one load at $1.55. Barrels were down $.03at $1.4875. There was one load sold at $1.4875. The last unfilled bid was on two loads at $1.45. The last uncovered offer was for one load at $1.49.

Butter was up $.03 at $2.15. There was one load sold at $2.15. The last unfilled bid was on one load at $2.16.

Nonfat dry milk held at $.8225. The last unfilled bid was on one load at $.815. The last uncovered offer was for two loads at $.83.

Cooperatives Working Together announced the acceptance of 19 requests for export assistance from member coops. The assistance covers 2.588 million tons of Cheddar and Monterey Jack cheeses, and 52,360 tons of butter. The products are headed to Asia, Central America, the Middle East, and Oceania with delivery slated for February through May.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mostly higher with nearby months up on spread trade and oversold signals. February was up $.02 at $16.87, March was $.05 higher at $16.43, April was up $.08 at $16.66, and May was $.04 higher at $16.80.

Cash cheese blocks were up $.0475 at $1.5575. The last unfilled bid was on one load at $1.5575. Barrels were down $.03 at $1.54. There were a total of ten trades, nine at $1.57 and one at $1.54. The last uncovered offer was for one load at $1.55.

Butter was $.0125 higher at $2.13. There was one load sold at $2.115. The last unfilled bid was on one load at $2.13.

Nonfat dry milk was $.0175 lower at $.8525. There was one load sold at $.8525. The last unfilled bid was on one load at $.85. The last uncovered offer was for one load at $.855.

The USDA reports butter for the week ending February 18th averaged $2.16 per pound, down $.051 on the week. 40 pound blocks of cheese came out at $1.71, $.017 lower. 500 pound barrels averaged $1.66, up $.075. Dry whey was pegged at $.494, $.012 higher. Nonfat dry milk averaged $.982, down $.01.

The USDA set the Class I milk price for March 2017 at $16.90 per hundredweight, up $.17 from February 2017. The base Class I price is $8.65, $.45 higher.

California’s Department of Food and Agriculture reports nonfat dry milk for the week ending February 17th averaged $1.0099 per pound, up $.012 on the week. Sales of 4,705,718 pounds were down 2,281,814.

Source: Brownfield Ag News

Fonterra said it had confirmed its farmgate milk price at $6.00 per kg of milksolids for the current season.

Combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total pay-out available to farmers in the current season is forecast to be $6.50 to $6.60. before retentions.

Fonterra Chairman John Wilson says the Co-operative is confident that this forecast is at the right level, following the 75 cent rise in its forecast Farmgate Milk Price in November last year.

Market expectations were for a lift in the milk price to $6.25/kg.

“The global outlook for dairy remains positive. Since November, the global market for commodity dairy products has remained relatively balanced and we expect global prices to continue to hold or gradually increase over the back half of this season – a view shared by most global analysts,” Wilson said in a statement.

Fonterra also announced that it would increase the monthly Advance Rate it pays to farmers.

The Advance Rate for February, paid in March, has increased to $4.85 per kg.

The co-operative in its latest Global Dairy Update for February reported that the Co-operative’s New Zealand milk collections were showing signs of recovery. Fonterra now expects collections to be down by five per cent, compared with a previous forecast of a 7 per cent decline.

Source: NZ Herald

Class III milk futures at the Chicago Mercantile Exchange were down, pressured by the January milk production numbers and follow through selling. February was $.02 lower at $16.85, March was down $.19 at $16.38, April was $.09 lower at $16.58, and May was down $.01 at $16.76.

Cash cheese blocks were $.02 lower at $1.51. There were a total of four loads sold, including one at $1.51. The last unfilled bid was on one load at $1.5075. The last uncovered offer was for one load at $1.52. Barrels were down $.03 at $1.57. The last uncovered offer was for one load at $1.57.

Butter was $.0225 lower at $2.1175. There was one load sold at $2.1175.

Nonfat dry milk was down $.005 at $.87. There was one load sold at $.87. The last unfilled bid was on one load at $.855. The last uncovered offer was for one load at $.87.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were lower on follow through selling with many months breaking through what had been technical support. February was $.01 lower at $16.87, March was down $.30 at $16.57, April was $.23 lower at $16.67, and May was down $.23 at $16.77.

Cash cheese blocks were $.05 lower at $1.53. There were five loads sold, including three at $1.53. The last uncovered offer was for one load at $1.54. Barrels were down $.02 at $1.60. There were five loads sold, all at $1.60. The last uncovered offer was for three loads, also at $1.60.

Butter was $.0175 lower at $2.14. The last uncovered offer was for three loads at $2.14.

Nonfat dry milk was up $.005 at $.875. The last unfilled bid was on one load at $.875.

The Global Dairy Trade index was down 3.2% at $3,474 per ton. Butter milk powder dropped 12.9% and rennet casein was 5.8% lower, while lactose was gained 6.8% and butter was up 0.2%. The next event is scheduled for March 7th.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mostly lower on spread trade, technical selling, and demand uncertainties. February was up $.02 at $16.90, March was down $.10 at $16.93, April was $.08 lower at $17.05, and May was down $.11 at $17.07.

Cash cheese barrels were down $.0075 $1.5975. There were three loads sold, two at $1.60 and one at $1.6025. The last uncovered offer was for one load at $1.5975. Barrels were unchanged at $1.65. There were four loads sold, all at $1.65.

Butter held at $2.1575. The last unfilled bid was on one load at $2.13. The last uncovered offer was for one load at $2.1575.

Nonfat dry milk was $.03 lower at $.88. There was one load sold at $.88. The last unfilled bid was on two loads at $.875. The last uncovered offer was for one load at $.885.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mostly higher on spread trade and short covering. February was unchanged at $16.88, March was up $.12 at $17.03, April was $.13 higher at $17.13, and May was up $.09 at $17.18.

Cash cheese blocks were down $.005 at $1.605. There were a total of seven loads sold, including three at $1.605 and four at $1.61. The last uncovered offer was for one load at $1.61. Barrels were unchanged at $1.65. There were three loads sold at $1.65. The last unfilled bid was on one load at $1.64.

Butter was $.0275 higher at $2.1575. There was one load sold at $2.15. The last unfilled bid was on one load at $2.1575. The last uncovered offer was for one load at $2.17.

Nonfat dry milk was up $.0075 at $.91. There were two loads sold at $.91. The last unfilled bid was on one load at $.9025. The last uncovered offer was for one load at $.93.

The USDA reports butter for the week ending February 11th averaged $2.21 per pound, down $.021 on the week. 40 pound blocks of cheddar were pegged at $1.73, up $.01. 500 pound barrels averaged $1.59, $.019 lower. Dry whey came out at $.482, $.014 higher. Nonfat dry milk averaged $.991, a decline of $.028.

California’s Department of Food and Agriculture reports nonfat dry milk for the week ending February 10th averaged $.9979 per pound, down $.0297 on the week. Sales of 6,987,532 pounds were 2,295,149 below the week before.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mixed with nearby contracts up and deferred months down in spread trade. February was up $.01 at $16.86, March was $.07 higher at $16.91, April was up $.07 at $17.00, and May was $.01 higher at $17.09.

Cash cheese barrels were up $.01 at $1.61. There were two loads sold, one at $1.61 and one at $1.60. The last unfilled bid was on one load at $1.60. The last uncovered offer was for one load at $1.62. Barrels held at $1.65. There were two loads sold at $1.65.

Butter was $.0275 higher at $2.13. There were two loads sold, one at $2.115 and one at $2.1225. The last unfilled bid was on two loads at $2.13 and the last uncovered offer was for one load at $2.20.

Nonfat dry milk was up $.0025 at $.9025. There were four loads sold, including one at $.9025 and two at $.90. The last unfilled bid was on two loads at $.90. The last uncovered offer was for one load at $.91.

Cooperatives Working Together announced the acceptance of 13 requests for export assistance. That covers 2.048 million pounds of Cheddar and Monterey Jack cheeses headed to Asia and Oceania with delivery scheduled for February through May.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mostly lower on spread trade and follow through selling. February was up $.01 at $16.87, March was down $.07 at $16.84, April was $.09 lower at $16.93, and May was down $.05 at $17.08.

Cash cheese barrels were $.01 lower at $1.60. There were two loads sold at $1.60. The last uncovered offer was for one load at $1.61. Barrels were unchanged at $1.65. The last uncovered offer was for one load at $1.65.

Butter held at $2.1025. The last unfilled bid was on one load at $2.09.

Nonfat dry milk was down $.02 at $.90. There was one load sold at $.90. The last unfilled bid was on two loads at $.88. The last uncovered offer was for one load at $.9025.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mostly higher following the new USDA supply and demand report. The USDA raised its 2017 production guess, but also increased some demand categories and 2017 prices are expected to be above 2016. February was unchanged at $16.85, March was $.03 higher at $16.97, April was up $.11 at $17.13, and May was $.07 higher at $17.22.

Cash cheese blocks were unchanged at $1.62. There were a total of eight loads sold, six at $1.60, one at $1.61, and one at $1.62. The last unfilled bid was on three loads at $1.60. The last uncovered offer was for one load at $1.63. Barrels were down $.015 at $1.65. There were five loads sold at $1.65. The last unfilled bid was on one load, also at $1.65. The last uncovered offer was for one load at $1.66.

Butter held at $2.1775. The last uncovered offer was for one load at $2.18.

Nonfat dry milk was up $.0025 at $.9625. There were ten loads sold, nine at $.96 and one at $.9625. The last unfilled bid was on one load at $.96. The last uncovered offer was for one load at $.9625.

The USDA has raised its 2017 milk production outlook by 300 million pounds to 217.4 billion. On the fat basis, marketings were also up 300 million pounds to 216.4 billion and imports were lowered 400 million pounds to 6.6 billion. Commercial fat basis exports were left at 8.3 billion pounds and ending stocks are expected to be 14.3 billion pounds, up 1.1 billion from January. On the skim-solid basis, marketings were also up 300 million pounds at 216.4 billion and imports held at 6.2 billion pounds. Commercial skim-solid exports were lowered 100 million pounds to 40.1 billion and ending stocks were raised 1.1 billion pounds to 14 billion.

For 2017, the all milk price is projected at $17.70 to $18.40 per hundredweight, compared to $17.60 to $18.40 in January and the 2016 estimate of $16.24. Class III is seen at $16.45 to $17.15, compared to $16.35 to $17.15 last month and $14.87 last year. Class IV is estimated at $15.10 to $15.90, compared to $15.25 to $16.15 a month ago and $13.77 a year ago.

The 2017 price of cheese is now expected to be between $1.66 and $1.73 per pound, compared to 2016’s estimate of $1.605. Butter is projected at $2.045 to $2.145, compared to $2.0777 last year. Nonfat dry milk is estimated at $.99 to $1.05, compared to $.8292 a year ago. Dry whey is seen at $.455 to $.485, compared to $.2875 in 2016.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were up on an oversold bounce. February was $.07 higher at $16.85, March was up $.13 at $16.94, April was $.09 higher at $17.02, and May was up $.12 at $17.15.

Cash cheese blocks were down $.01 at $1.62. There were three loads sold, two at $1.62 and one at $1.63. The last uncovered offer was for one load at $1.63. Barrels were $.015 lower at $1.685. The last uncovered offer was for two loads at $1.685.

Butter was $.0175 higher at $2.1775. There were a total of four loads sold, including one at $2.1775. The last uncovered offer was for two loads at $2.18.

Nonfat dry milk was up $.01 at $.96. There were three loads sold at $.96. The last unfilled bid was on four loads at $.96. The last uncovered offer was for one load at $.97.

The Global Dairy Trade index was up modestly for the second event in a row, gaining 1.3% to $3,537 per ton. Lactose was up 12.4% and butter was 4.9% higher, while Butter milk powder was down 7.5% and cheddar cheese was 3.7% lower. The next event is scheduled for Tuesday, February 21st.

Cooperatives Working Together announced the acceptance of six requests for export assistance from member coops. That covers 557,770 pounds of cheddar and Monterey Jack cheeses. The products are headed to Asia with delivery slated for February through April.

The USDA says butter for the week ending February 4th averaged $2.23 per pound, down $.027 on the week. 40 pound blocks of cheddar came out at $1.72, $.001 lower. 500 pound barrels averaged $1.61, a decline of $.044. Dry whey was pegged at $.469, up $.009. Nonfat dry milk averaged $1.02, down $.004.

California’s Department of Food and Agriculture reports the average nonfat dry milk price for the week ending February 3rd was $1.0276 per pound, up $.0301 from the previous week. Sales of 9,282,681 pounds were 3,258,953 higher than the week before.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were lower, following through on Friday’s losses. February was down $.08 at $16.79, March was $.27 lower at $16.92, April was down $.22 at $17.04, and May was $.16 lower at $17.15.

Cash cheese blocks were four cents lower at $1.70. There were three loads sold, two at $1.70 and one at $1.72. The last uncovered offer was for one load at $1.70. Barrels were $.0025 higher at $1.71. There were four loads sold, one at $1.71 and three at $1.7075.

Butter was unchanged at $2.1575. The last unfilled bid was on one load at $2.13.

Nonfat dry milk held at $.94. The last unfilled bid was on two loads at $.925. The last uncovered offer was for one load at $.965.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were lower, following through on Friday’s losses. February was down $.08 at $16.79, March was $.27 lower at $16.92, April was down $.22 at $17.04, and May was $.16 lower at $17.15.

Cash cheese blocks were four cents lower at $1.70. There were three loads sold, two at $1.70 and one at $1.72. The last uncovered offer was for one load at $1.70. Barrels were $.0025 higher at $1.71. There were four loads sold, one at $1.71 and three at $1.7075.

Butter was unchanged at $2.1575. The last unfilled bid was on one load at $2.13.

Nonfat dry milk held at $.94. The last unfilled bid was on two loads at $.925. The last uncovered offer was for one load at $.965.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were higher on technical and commercial buying. February was up $.25 at $16.99, March was $.25 higher at $17.40, April was up $.18 at $17.52, and May was $.20 higher at $17.54.

Cash cheese blocks were $.10 higher at $1.85. There was one load sold at $1.85. Barrels were up $.12 at $1.6975. There were two loads sold, one at $1.6975 and one at $1.5775.

Butter was $.06 lower at $2.18. There were four loads sold, including one at $2.18. The last unfilled bid was on two loads at $2.16.

Nonfat dry milk was up $.0025 at $.95. The last unfilled bid was on one load at $.95. The last uncovered offer was for one load at $.9675.

The USDA says the January 2017 Class II milk price was $16.36, up $1.10 from December 2016. The Class III price was $16.77, down $0.63. The Class IV price was $16.19, $1.22 higher.

Cooperatives Working Together announced the acceptance of 13 requests for export assistance from member cooperatives. That covers 989,876 pounds of Cheddar and Monterey Jack cheeses and 1.102 million pounds of butter. Those products are headed to Asia, the Middle East, and North Africa with delivery scheduled for January through April.

Source: Brownfield Ag News

The USDA announced that the January Class III milk price was released at $16.77 per hundredweight. That’s down 63-cents from December’s price, but $3.05 above January 2016.During the past year, the Class III price has averaged $14.87 in 2016.

During the past year, the Class III price has averaged $14.87 in 2016.Class IV component price was $1.22 more than last month’s price at $16.19

Class IV component price was $1.22 more than last month’s price at $16.19, and was $2.88 more than January of last year.Meanwhile, the USDA reported that the U.S. milk price for December was $18.80 per cwt.

Meanwhile, the USDA reported that the U.S. milk price for December was $18.80 per cwt.

Source: Wisconsin Ag Connection

Dairy giant Fonterra on Wednesday raised its Australian farmgate milk payout slightly to A$5.20 ($3.97) per kilogram of milk solids, in line with its forecasts, as falling production pushed up prices.

The A$0.10 per kilogram increase by the New Zealand co-operative comes amid a recovery in global dairy prices that began last year after two years of falls.

“Production has fallen across the major exporting regions, particularly Europe and New Zealand, and we’ve seen a significant decline in Australian milk supply,” Australia managing director René Dedoncker said in a statement.

Farmers and analysts had been nervous that a 50 percent rebound in dairy prices during 2016 appeared to be stalling after prices began to slip in late December.

Source: Reuters

Class III milk futures at the Chicago Mercantile Exchange were narrowly mixed in pretty quiet activity. February was up $.03 at $16.74, March held at $17.15, April was $.04 higher at $17.34, and May was $.03 lower at $17.34.

Cash cheese blocks were up $.0425 at $1.75. The last unfilled bid was on one load at $1.75. Barrels were $.06 higher at $1.5775. There were a total of seven trades, one at $1.5775 and four at $1.5125.

Butter held at $2.24. The last uncovered offer was for three loads at $2.24.

Nonfat dry milk was up $.0025 at $.9475. The last unfilled bid was on one load at $.9475. The last uncovered offer was for one load at $.9675.

HighGround Dairy reports the Netherlands produced a record amount of milk in 2016 and part of the herd will have to be culled to meet phosphate limits set by the European Union.

For the week ending January 28th, the USDA says butter averaged $2.26 per pound, down $.015. 40 pound blocks of cheddar came out at $1.72, up $.011. 500 pound barrels of cheddar averaged $1.65, $.002 lower. Dry whey was pegged at $.459, $.014 higher. Nonfat dry milk averaged $1.02, down $.007.

Source: Brownfield Ag News

Class III milk futures at the Chicago Mercantile Exchange were mixed with nearbys up and deferreds down in consolidation and spread activity. January was up $.01 at $16.75, February was $.15 higher at $16.71, March up $.07 at $17.15, and April was $.01 higher at $17.30.

Cash cheese blocks were up $.0175 at $1.7075. There was one load sold at $1.6925. The last unfilled bid was on one load at $1.7075. Barrels were $.0575 higher at $1.5175. There were four loads sold, including one at $1.5175. The last unfilled bid was on one load at $1.50.

Butter was up $.02 at $2.24. The last unfilled bid was on one load at $2.24.

Nonfat dry milk held at $.945. The last unfilled bid was on one load at $.9325.

The USDA’s December dairy index was 93.5, up 6.7% on the month and 8.6% on the year. The all milk price at $18.80 per hundredweight, $1.20 higher than November and $1.50 more than in December 2015.

Milk replacement heifers at the start of 2017 were 4.75 million head, down 1%.

Class III milk futures at the Chicago Mercantile Exchange were down on profit taking and demand uncertainties. January was $.01 lower at $16.74, February was down $.06 at $16.56, March was $.07 lower at $17.08, and April was down $.14 at $17.29.

Cash cheese blocks were up $.0025 at $1.69. There was one load sold at $1.69. Barrels were $.0125 higher at $1.46. There were two loads sold, one at $1.4575 and one at $1.4525. The last unfilled bid was on one load at $1.46. The last uncovered offer was for one load at $1.47.

Butter held at $2.22. The last unfilled bid was on one load at $2.21.

Nonfat dry milk was down $.0025 at $.945. There was one load sold at $.945. The last unfilled bid was on one load at $.89.

Source: Brownfield Ag News

Chicago Mercantile Exchange Class III milk futures were pressured by the USDA’s monthly cold storage and milk production numbers.  January was down $.02 at $16.74, February was $.13 lower at $16.57, March was down $.16 at $16.98, and April was $.22 lower at $17.28.

Cash cheese blocks held at $1.64. There were a total of four loads sold, three at $1.63 and one at $1.64. The last uncovered offer was for one load at $1.65. Barrels were $.02 lower at $1.46. There were a total of nine loads sold, including three at $1.46 and three at $1.47. The last unfilled bid was on one load at $1.4525. The last uncovered offer was for one load at $1.47.

Butter was down $.02 at $2.1975. The last uncovered offer was for one load at $2.1975.

Nonfat dry milk was unchanged at $.985. The last unfilled bid was on one load at $.9825. The last uncovered offer was for one load at $1.01.

The USDA reports cash butter for the week ending January 21st averaged $2.27 per pound, up $.038 on the week. 40 pound blocks of cheddar came out at $1.71, $.005 higher. 500 pound barrels averaged $1.65, up a penny. Dry whey came out at $.445, $.008 higher. Nonfat dry milk averaged $1.03, up $.004.

Source: Brownfield AgNews 

Class III milk futures at the Chicago Mercantile Exchange were mixed in consolidation trade. January was unchanged at $16.76, February was up $.04 at $16.70, March was down $.01 at $17.14, and April was $.01 higher at $17.50.

Cash cheese blocks were down $.01 at $1.64. The last uncovered offer was for one load at $1.64. Barrels were $.02 lower at $1.48. There were six loads sold, including two at $1.48. The last unfilled bid was on two loads, also at $1.48. The last uncovered offer was for one load at $1.50.

Butter was unchanged at $2.2175.

Nonfat dry milk was down $.015 at $.985. There were three loads sold, one each at $.995, $.99, and $.985. The last unfilled bid was on one load at $.985. The last uncovered offer was for one load at $.9875.

Source: Brownfield Ag News

In Class III trade at the Chicago Mercantile Exchange, milk futures bought back some of the recent losses. January was up $.02 at $16.80, February was $.09 higher at $17.00, March was up $.13 at $17.41, and April was $.15 higher at $17.61.

Cash cheese blocks were up $.0275 at $1.72. There were a total of nine trades reported, including three at $1.675, two at $1.71, and one at $1.72. The last uncovered offer was for one load at $1.73. Barrels were down $.045 at $1.565. There were sold loads sold, including two at $1.565 and two at $1.56. The last unfilled bid was on one load at $1.555.

Butter was a penny higher at $2.25. There was one load sold at $2.25. The last unfilled bid was on one load, also at $2.25.

Nonfat dry milk was $.0325 lower at $1.005. There were a total of seven loads sold, six at $1.005 and one at $1.02. The last unfilled bid was on one load at $.99.

The base Class I milk price for February is $16.73 per hundredweight, down $.72 from January, and the skim price is $8.20, $1.41 lower.

The USDA says butter for the week ending January 14th averaged $2.23 per pound, down $.041 on the week. 40 pound blocks of cheddar were pegged at $1.70, $.039 lower. 500 pound barrels averaged $1.64, down $.019. Dry whey came out at $.437, up $.012. Nonfat dry milk averaged $1.02, a penny higher.

California’s Department of Food and Agriculture reports nonfat dry milk for the week ending January 13th averaged $.999 per pound, up $.106 on the week and the seventh week in a row with a gain. Sales of 6,009,744 pounds were down 1,120,973 from the week before.

Source: Brownfield Ag News

Jan 18 International dairy prices edged up slightly at an auction held early on Wednesday, reinforcing an ongoing recovery that had been dented by two consecutive fortnights of losses.

Average prices climbed 0.6 percent at the Global Dairy Trade auction, which takes place twice a month, with an average selling price of $3,517 per tonne.

The relatively flat result reflected balancing supply and demand after tighter supply in New Zealand and Europe pushed up prices last year.

“At present there is neither a shortage of dairy products or an excess of product available,” Amy Van Ossenbruggen, dairy analyst at AgriHQ, said.

“This situation is likely to persist for the next few months during which time prices will most likely bob up and down from week to week,” she added.

Farmers and analysts had been nervous that a 50 percent rebound in prices during 2016 after two years of falls was stalling.

A total of 22,030 tonnes was sold at the latest auction, falling 1.6 percent from the previous one, Global Dairy Trade said.

Global Dairy Trade is owned by New Zealand co-operative Fonterra, but operates independently from the dairy giant. A number of companies, including Dairy America and Murray Goulburn, use the platform to sell milk powder and other dairy products.

The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of the nation’s gross domestic product.

The Kiwi soared 1.4 percent to a one-month high of $0.7203. Much of that was on U.S. dollar weakness, but analysts said rising dairy prices also contributed to the rally.

Source: Reuters

In Class III trade at the Chicago Mercantile Exchange, milk futures were mixed, with nearby contracts down on spread trade. January was $.02 lower at $16.79, February was down $.15 at $17.03, March was up $.03 at $17.46, and April was $.01 higher at $17.61.

Cash cheese was lower. Blocks were down $.02 at $1.705. There were a total of four trades reported, including one at $1.705. The last unfilled bid was on one load at $1.69. Barrels were $.0025 lower at $1.6375. There was one trade at $1.645. The last uncovered offer was for one load at $1.6375.

Butter was up $.015 at $2.24. There were two loads sold, both at $2.24.

Nonfat dry milk held at $1.0325. The last unfilled bid was on two loads at $1.0225. The last uncovered offer was for one load at $1.035.

The Global Dairy Trade index was up 0.6% at $3,517 per ton. Rennet casein was up 4.9% and anhydrous milk fat was 3.7% higher, while butter milk powder dropped 10.1%. The next event is scheduled for February 7th.

Source: Brownfield Ag News

In Class III trade at the Chicago Mercantile Exchange, milk futures were mostly lower on spread trade and profit taking. January was up $.02 at $16.81, February was down $.16 at $17.18, March was $.20 lower at $17.43, and April was down $.10 at $17.60.

Cash cheese blocks were $.025 lower at $1.725. The last uncovered offer was for one load at $1.725. Barrels were unchanged at $1.64.

Butter was down $.02 at $2.225. The last unfilled bid was on two loads at $2.20. The last uncovered offer was for one load at $2.225.

Nonfat dry milk held at $1.0325. The last unfilled bid was on one load at $1.03. The last uncovered offer was for one load at $1.05.

The USDA says most U.S. butter plants are at full capacity thanks to the large available cream volumes. That strong production of mostly bulk butter is keeping supply above demand and a lot of the product will be headed to cold storage. Print demand is expected to be good ahead of the Super Bowl the following spring holidays. Spot activity was light over the past week.

Cheese production was active in most areas, with plentiful supplies of milk in the Midwestern and Western regions. Food service orders in the Midwest have been slow, when compared to the Northeast. Fresh blocks are relatively scarce when compared to aged blocks and barrels.

Fluid milk production is mixed, depending on weather. Demand for single serving containers is higher as schools get back in session. Retail demand is spiking in some areas because of demand ahead of winter storms. USDA says the cream supply is generally good and while the Eastern market is a little slow, some of those spot loads are heading to the Midwest.

At the retail level, conventional dairy ads were down 21% on the week, but organic was up 24%. The spread for organic and conventional pounds of butter is $1.60 in favor of organic and organic half gallons of milk have a premium of $.90.

Source: Brownfield Ag News

In Class III trade at the Chicago Mercantile Exchange, milk futures were mostly lower, following the recent market trend. January, the only active contract in the black, was up $.05 at $16.57, February was down $.14 at $16.70, March was $.11 at $16.92, and April was down $.18 at $17.07.

Cash cheese blocks were down $.0025 at $1.6575. There was one trade at $1.6575. Barrels held at $1.595.

Butter was unchanged at $2.26. The last uncovered offer was for one load at $2.26.

Nonfat dry milk was up $.0025 at $1.03. The last unfilled bid was on one load at $1.03. The last uncovered offer was for one load at $1.0425.

The USDA says butter for the week ending December 31st averaged $2.16 per pound, up $.048 on the week. 40 pound blocks of cheddar came out at $1.77, down $.019. 500 pound barrels averaged $1.68, $.023 lower. Dry whey was pegged at $.414, $.007 higher. Nonfat dry milk averaged $.993, up $.023.

For December, the Class II milk price was $15.26 per hundredweight, up $.66 from November. Class III came out at $17.40, $.64 higher. The Class IV price of $14.97 was $1.21 higher.

California’s Department of Food and Agriculture reports the average nonfat dry milk price for the week ending December 30th was $.9681 per pound, up $.0066 on the week and the fifth week in a row with a gain. Sales of 3,471,600 pounds were down 6,776,855 pounds from the previous week

Source: Brownfield Ag News

International milk prices posted their largest fall in three months in the year’s first auction held early Wednesday, dragged down by a sharp drop in whole milk powder prices as an expected rally failed to materialize.

The Global Dairy Price index fell 3.9 percent with an average selling price of $3,463 per ton. The index fell 0.5 percent at the previous sale.

It was the first time in more than six months that prices fell at consecutive fortnightly auctions and it tempers a rise of 50 percent during 2016, as prices rebounded after two years of falls.

The price index for whole milk powder dropped 7.7 percent, against futures market expectation for flat trade, following an announcement a week ago from dairy giant Fonterra that it had lifted production volumes by 5 percent.

“It appears there simply weren’t enough buyers willing to pay any higher prices to absorb the extra supply on offer,” said Agri HQ dairy analyst Amy Van Ossenbruggen in an emailed note.

Fewer bidders participated in the Wednesday auction than the average over recent months, she said.

A total of 22,396 tons was sold at the latest auction, an increase of 0.3 percent from the previous one, Fonterra said on its website.

Milk fat and lactose prices also fell, while skim milk powder prices rose 2.3 percent, butter prices rose 0.5 percent and cheese prices rose 1.4 percent.

Dairy analysts had expected a continued recovery in prices as a global supply surplus is eroded amid stronger international demand.

The auction results can affect the New Zealand dollar as the dairy sector generates more than 7 percent of gross domestic product.

The kiwi was trading around $0.6918, down 0.19 percent, after the auction.

Source: Reuters

In Class III trade at the Chicago Mercantile Exchange, milk futures were mostly lower, following through on Tuesday’s trends. January was up $.01 at $16.51, February was down $.08 at $16.84, March was $.14 lower at $17.03, and April was down $.11 at $17.25.

Cash cheese blocks were down $.01 at $1.66. The last uncovered offer was for one load at $1.66. Barrels held at $1.595.

Butter was up $.04 at $2.26. There were a total of fourteen trades, from two at $2.195 to one at $2.26.

Nonfat dry milk was $.0075 higher at $1.0275. There were two loads sold, one at $1.025 and one at $1.0275. The last unfilled bid was on one load at $1.0225. The last uncovered offer was for two loads at $1.05.

Source: Brownfield Ag News

The first Global Dairy Trade auction of 2017 has seen prices at the event fall 3.9%. The drop follows a a decrease of 0.5% at the last auction of 2016.

Whole milk powder (WMP) prices were down 7.7% at today’s auction, with lactose prices and rennet casein prices down 2.9% and 2.7%, respectively.

Skimmed milk powder (SMP) prices increased 2.3% and butter prices were up 0.5%.

Key Results
AMF index down 0.6%, average price US$5,352/MT
Butter index up 0.5%, average price US$4,308/MT
BMP index up 4.5%, average price US$2,670/MT
Ched index up 1.4%, average price US$3,894/MT
LAC index down 2.9%, average price US$836/MT
RenCas index down 2.7%, average price US$6,234/MT
SMP index up 2.3%, average price US$2,660/MT
WMP index down 7.7%, average price US$3,294/MT

Meanwhile, Irish milk prices should break through the 30c/L barrier this month, according to IFA Dairy Committee Chairman Sean O’Leary.

“We have continued to see a significant fall back in milk output across the EU, so there is every prospect of the co-ops adding another 1c/L on to the price they pay for December milk.

“And that should get us through the 30c barrier,” he said.

O’Leary believes that the prospect for dairy prices remains positive right up to the end of June this year.

“I don’t think European farmers will be able to turn the milk production tap back on that quickly, such was the scale of culling that took place at the back end of last year. Many farmers will also prioritise on paying back debt, before they consider increasing output.

“All of this bodes well for Irish milk prices over the coming months.”

Source: AgriLand

In Class III trade at the Chicago Mercantile Exchange, milk futures were mostly lower on spread trade and the lower Global Dairy Trade auction. January was up $.04 at $16.51, February was down $.03 at $16.92, March was $.13 lower at $17.17, and April was down $.12 at $17.36.

Cash cheese blocks were up $.01 at $1.67. There was one load sold at $1.67. The last unfilled bid was on two loads at $1.66. Barrels were down $.005 at $1.595. There were two trades, one at $1.61 and one at $1.60. The last uncovered offer was for one load at $1.595.

Butter was $.0475 lower at $2.22. There was one load sold at $2.22.

Nonfat dry milk held at $1.02. The last unfilled bid was on one load at $1.01.

The Global Dairy Trade auction index dropped 3.9% to $3,463 per ton, the second consecutive losing session. Previously, the index had been up four events in a row. Whole milk powder dropped 7.7% and lactose was 2.9% lower, while butter milk powder was up 4.5%. The next event is Tuesday, January 17th.

Source: Brownfield Ag News

In Class III trade at the Chicago Mercantile Exchange, milk futures were mostly lower on spread trade and profit taking. January was down $.15 at $16.46, February held at $17.10, March was $.05 lower at $17.42, and April was down $.06 at $17.53.

Cash cheese blocks were down $.0125 at $1.655. The last uncovered offer was for one load at $1.655. Barrels were unchanged at $1.5575. There were a total of five trades, two each at $1.5775 and $1.5875, along with one load at $1.5675. The last uncovered offer was for one load at $1.5575.

Butter was $.0425 lower at $2.2675. There were six loads sold, including one at $2.2675 and three at $2.555. The last unfilled bid was on one load at $2.26.

Nonfat dry milk was unchanged at $1.02. The last unfilled bid was on six loads at $1.00. The last uncovered offer was for one load at $1.05.

The USDA reports butter for the week ending December 24th averaged $2.12 per pound, up $.018 on the week. 40 pound blocks of cheddar were pegged at $1.79, down $.045. 500 barrels of cheddar averaged $1.70, $.011 higher. Dry whey came out at $.406, up $.003. Nonfat dry milk averaged $.971, $.004 higher.

California’s Department of Food and Agriculture says nonfat dry milk for the week ending December 23rd averaged $.9615 per pound, up $.0019 on the week, and the fourth week in a row with an increase. Sales of 10,248,455 pounds were 5,782,345 higher than the previous week.

Source: Brownfield Ag News

Dairy commodity prices recovered in 2016 – and how – as the market slump of the previous two years at last put the brakes on output.

The recovery was also helped by renewed interest by Chinese buyers, after inventories run up during a 2013-14 buying spree eroded.

Prices, as measured by the GlobalDairyTrade index, rebounded by 47%, making dairy one of the strongest markets of the year – albeit the index remained well below a 2013 peak.

But will values continue in 2017 to track towards that high? Or will higher prices boost output and stem the recovery?

Expert commentators give their views.

Bank of New Zealand

Tightening milk supply in key dairy exporting regions continues to drive dairy prices higher.

Strength in whole milk powder forward contracts into the middle of next year is encouraging. There is no sign there that an end to the EU’s Milk Production Reduction Scheme early next year will dent prices.

Meanwhile, October figures show New Zealand peak milk production well behind year earlier levels, although it is worth noting that New Zealand has put the wet spring behind it and recent reports of better grass growth is likely to see recent production not trailing last year as much as October’s 6%.

Less New Zealand milk to date is adding to a tightening in global supply. EU milk production was down 3% year on year in September and probably down more over recent months.

All this sees us lifting our 2016-17 milk price forecast to NZ$6.40 per kilogramme of milk solids, from NZ$6. The milk price could well end up higher than this if global milk supply continues to contract more than anticipated.

Dairy Management Inc and National Milk Producers Federation

The $0.70-per-hundredweight drop in the October [US] all-milk price was largely predicted by the changes in the previously announced October federal order class prices.

But the November federal order prices indicate this will reverse, with the all-milk price likely snapping back to approximately its September level of $17.30 per hundredweight in November.

As of mid-December, the Chicago dairy futures were suggesting that the all-milk price will move up fairly steadily throughout 2017 and average about $19 per hundredweight for the year.

In December, USDA raised its monthly forecast of the US average all-milk price for 2017 by $0.50, to $17.25 per hundredweight. At the same time, futures-based forecasts of the MPP margin, including US Department of Agriculture’s, ranged from around $10.30–$11 per hundredweight for 2017.

Starting in January, however, rising US milk production will test the resilience of the relatively robust butter and cheese prices that have generally prevailed during the 2016 holidays.

Macquarie

A recovery in dairy commodity prices has emerged in the last few months. The recovery has been driven by a moderation in supply, with low milk prices finally impacting farmer output across major producing regions.

On a year-to-date basis, prices are up around 20-25% but generally remain below historical averages. While milk output is falling, there remain some inventories in the market, particularly for skim milk powder and cheese, which will work their way out over the next 6-9 months.

The recent rally in commodity prices is starting to be passed back to farmers through higher farmgate milk prices. However, on-farm profitability has been tough for a few years. Feed costs remain favourable for a number of regions, and our dairy/feed price model indicates that prices are around par with the level implied by current feed costs.

Supply growth from the key export regions turned negative in June and July, with softening in European production (-1–2%), a decline in Australia (-10%) and New Zealand being a little weak (-2%) due to below-breakeven farmgate prices.

Chinese demand for whole milk powder has increased, with the 12-month run rate up by 17% as at August. There has been no change in Russian imports with the agricultural ban extended.

Rabobank

Milk production around the world in the second half of 2016 is in poor shape. Europe’s production has tightened – not only due to low prices, but also in response to the efforts of the European subsidies which… should remove 1m tonnes from the market.

In New Zealand, the poor start to the season has affected farmers’ ability to respond, with this season’s peak production being 6% down on last year’s level.

The result of this tightening global production in the second half of 2016 is that stockbuilding has ceased, and prices have started to rise sharply, with butterfat prices rising more sharply than protein

The European Commission, encouraged by strong local spot prices, has decided to start selling stocks before the end of the year.

Many are questioning if the commission is able to sell the year-old powder it is offering to the market while demand for protein remains weak. The problem is likely to become more apparent as the mew year progresses and farmers respond to higher farmgate prices, limiting the level of any skim milk powder and sweet whey powder price rises.

As we move into 2017 therefore we see prices of butterfat products continuing to be elevated, with cheese and butter prices continuing to climb, but with more stagnant protein prices.

As the year progress, and production grows, commodity prices will start to moderate.

VSA Capital

A significant shift in the global dairy market has occurred in the second half of 2016. Milk production has fallen in many countries, while demand in China for dairy products has stabilised and started to increase.

In Europe, the impact of quota removal on 1 April 2015 appears to have finally been flushed through the system.

In the UK, prices have been increasing, but not as fast as farmers would like. Although many farmers have come under significant financial strain and exited the industry altogether, we believe that those still operating are facing a brighter 2017.

Given that UK milk prices lag global prices, we would expect them to continue their upwards trajectory into 2017 with a weakened pound also supporting the UK price through increased dairy product exports.

However, it should be noted that considerable damage has already been done to UK farmers and therefore only a consistently higher milk price will encourage herd expansion.

Source: Agrimoney

In Class III trade at the Chicago Mercantile Exchange, milk futures were higher, rebounding from some recent mostly lower activity. January was up $.06 at $16.61, February was $.16 higher at $17.10, March was up $.15 at $17.47, and April was $.12 higher at $17.59.

Cash cheese blocks were down $.0025 at $1.6675. There were a total of seven trades, from $1.6575 to $1.67, including two trades at $1.6675. The last uncovered offer was on one load at $1.67. Barrels were up $.025 at $1.5575. There were 10 loads sold, including seven at $1.58. The last unfilled bid was on two loads at $1.54. The last uncovered offer was for one load at $1.5575.

Butter was $.0375 lower at $2.31. The last uncovered offer was for two loads at $2.31.

Nonfat dry milk was $.01 higher at $1.02. There was one trade at $1.02 and $1.0075. The last unfilled bid was on one load at $1.01. The last uncovered offer was for five loads at $1.05.

Source: Brownfield Ag News

Dairy prices will continue to improve next year as a result of strong demand and contracting supplies, says Rabobank.

Farmers producing milk have experienced an extremely difficult year in 2016, with prices collapsing because of an oversupplied market.

But producer prices have started to improve towards the end of the year and, in its global outlook for 2017, Rabobank – a leading agri-bank – says the improvement should continue next year.

“Dairy prices face support through 2017, from a solid global demand growth and contracting supplies due to low prices and government measures,” it says in its report. The European Union has put in place a milk production reduction scheme.

However, whilst it believes that prices will improve in the dairy sector, Rabobank believes that elsewhere prices will remain low.

It says that staple food commodities like wheat and corn are being stored in record volumes. This will weigh on the prices farmers can expect to be paid next year, it says.

2017 looks at stability for food prices

Stefan Vogel, Rabobank’s head of agri-commodity markets and an author of the outlook report, said: “After three years of declining prices and extreme weather wrecking crops in many important agricultural regions, 2017 looks set to bring some much needed stability to food prices.”

However, he said: “Nevertheless, record global stock levels mean prices are likely to remain stubbornly low – good news for consumers but less so for the world’s farmers.”

He warned that China could have a huge impact on what happens to food markets in 2017.

“Given the size of its population, its economic growth and its massive share of global agri-commodity imports, it exerts a colossal influence on world food prices. And, with huge stocks of many of the most important commodities – including corn, wheat and soybeans, any decision by China’s policymakers to begin selling down these reserves would have a profound effect on world markets as Chinese imports would decline,” he said.

Rabobank says that China holds huge stocks of many key commodities. Some estimates suggest that it holds 60 per cent of global cotton supplies, more than half of corn supplies, 40 per cent of the world’s wheat and 21 per cent of global soya bean stocks.

If the country decides to sell some of these stocks it could depress global markets, says the bank, which has looked at the prospects for 13 crucial food and agricultural commodities.

Rabobank says it expects wheat prices to strengthen to some extent, but says that prices will “remain below the forward curve, as a rising global demand—in response to multi-year low prices—is facing large supplies and record stocks.”

Corn prices will remain low, it says: “Despite a 40 per cent inventory increase in the US, global stock stay flat in 2016-17 and show the first decline since 2009 in 2017-18,” says Rabobank in the report.

Bad news for livestock farmers

One commodity expected to increase in price will be bad news for livestock farmers.

Soya meal, says the bank, is expected to “rise above forward curve, as a livestock expansion results in large US and global demand, while declining soy oil prices potentially slow US crush and slightly tighten supplies.”

Soya is the key protein ingredient in poultry feed in the UK. The price of soya meal, which is grown predominantly in North and South America, is already being affected here in the UK by the large fall in the value of Sterling.

Rabobank says that the increase in soya prices will be partially driven by an ongoing shift of developing countries towards a more meat-based, Western-style diet.

Rabobank expects United States inflation to increase to about two per cent during 2017. It also expects prices to rise in the UK and, to a lower extent, the Eurozone.

“Even these small increases may be enough to attract attention later in 2017 to commodity index funds, which offer a hedge against inflation while agricultural prices remain low,” says the report.

Euro depreciating

Volatility in the global currency markets will move agricultural commodity prices during 2017, says the bank, with the Euro likely to depreciate as a result of French, Dutch and German elections during 2017.

It says the potential impact of such fluctuations has already be seen in the UK, where the decline in the value of the pound since the Brexit vote in June has pushed up the price of food imports by as much as 16 per cent whilst boosting agricultural exports. It says that British grain sales abroad are at their highest level for nearly 20 years.

The report touches further on the potential impact of politics on the markets with reference to the election of Donald Trump as United States president.

“Rabobank is cautious on the outlook for the US. During his campaign Trump suggested he may pursue protectionist economic policies. Such action could have wide reaching effects on American imports and exports of commodities if trade agreements are revised.”

However, despite predictions of volatility, the bank says that a growing world population will still need feeding.
“While farmers, consumers and commodity traders will all be keeping an eye on potentially volatile currency prices during 2017, overall the fundamentals remain strong. The global population is growing and prosperity is rising, fuelling the switch to more expensive, meat and dairy rich diets.

“In our view global food prices should in the main hold up, even if farmers are braced for little or no commodity price growth during the year,” said Stefan Vogel.

Rabobank has been publishing its global outlook report since 2010.

Source: FarmingUK