Dairy margins deteriorated slightly over the first half of November, as milk prices declined while feed costs held relatively steady, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging, LLC.
Margins through the first half of 2015 exist between the 85th and 90th percentiles of the past 10 years, while Q3 2015 is near the 80th percentile.
USDA released the November World Ag Supply & Demand Estimates report, which surprisingly lowered the corn yield and production figures from last month. USDA pegged corn yield at 173.4 bushels per acre, down 0.8 bushels from last month and 1.6 bushels below the average trade estimate. Corn production, at 14.407 billion bushels, was down 68 million bushels from last month and 121 million below the average guess. Corn ending stocks were pegged at 2.008 billion bushels, down 73 million from October and 124 million below the average of analysts’ estimates.
Soybean ending stocks were left unchanged from last month at 450 million bushels, with yield and production rising slightly from last month in line with trade expectations.
Milk prices continue to come under pressure as cash cheese trade was off sharply at the CME, with signs that exports are starting to slow. USDA’s Foreign Ag Service reported September butter and butterfat shipments were down 31% from August on a daily average basis, and 79% lower than last year. Fresh cheese exports also fell, marking the first year-over-year decline since July 2011.
In addition, dairy cow slaughter continues to decline, with culling down 11% through the first three quarters of 2014 relative to the past two years, and off 7.3% from last year for the week ending Nov. 1.
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