USDA’s June 2016 monthly milk cost of production report showed higher feed prices offset a small increase in milk prices, but that situation improved somewhat in July. Find these and other numbers impacting dairy.
Dairy Margin Watch: July ended stronger
Dairy margins strengthened over the second half of July, with milk prices steady to a little higher while feed costs declined, according to the latest CIH Margin Watch report from Commodity & Ingredient Hedging LLC. Based on current futures prices, margins through the first half of 2017 remain near or above the 80th percentile of profitability over the past ten years.
Visit the Margin Manager website.
Feed starved dairy margins in June
As reflected in most other indexes, USDA’s June 2016 monthly milk cost of production report showed a small increase in milk prices was more than offset by higher feed prices, resulting in tighter margins.
U.S. milk prices averaged $14.80 per hundredweight (cwt) in June 2016, up 30 cents from May, but $2.30 less than in June 2015.
Total costs averaged $22.14 per cwt of milk sold, up 43 cents from May, but 55 cents less than June 2015.
Compared to May, the higher costs were primarily due to expenses related to feed and labor.
June 2016 total operating costs averaged $13.71 per cwt of milk sold, with feed (purchased, homegrown and grazed feed for all dairy animals) making up about $10.83 per cwt. Feed represented about 49 percent of total costs.
Three states receive half of May-June MPP-Dairy indemnity payments
Wisconsin, Minnesota and Iowa dairy producers will receive about half the Margin Protection Program for Dairy (MPP-Dairy) indemnity money paid out for the May-June period, according to a state-by-state list released by USDA.
Of the $11.17 million distributed nationwide, $5.71 million will go to producers in those three states.
It’s no regional conspiracy, just simple math. Payments are based on the level of coverage and the pounds of milk production enrolled in MPP-Dairy in 2016. Those states farmers led the nation in selecting margin insurance coverages in the $6, $6.50, $7, $7.50 and $8 per cwt ranges and protected the largest volume of milk production.
Read the full Progressive Dairyman article.
Read also: MPP-Dairy provides payout at $6 per hundredweight coverage level and above for May-June pay period
Record shipments of whey protein concentrates move the needle on June dairy exports
June U.S. dairy product exports were up 5 percent from a year ago and the highest volume since May 2015, according to Alan Levitt, with the U.S. Dairy Export Council. Gains were led by record shipments of whey protein concentrate (WPC), offsetting declines in all the other major categories.
Thanks to whey products, U.S. exports were equivalent to 14.9 percent of U.S. milk production in June on a total milk solids basis, the highest since April 2015. Imports were equivalent to 4.1 percent of production.
Read the full Progressive Dairyman article.
June yields more dairy products
USDA’s August Dairy Products report estimated June U.S. dairy product output. Butter and skim milk powders saw the biggest jump compared to the same month a year earlier. With one less day in the month, cheese and butter production were down from May 2015.
Nationally, June 2016 milk production was estimated at 17.770 billion pounds, up 1.5 percent from June 2015 and the strongest monthly year-over-year gain since March.
• Total cheese output (excluding cottage cheese) was 987 million pounds, 1.1 percent more than June 2015, but 1.5 percent less than May 2016.
• Butter production was 153 million pounds, 6.4 percent more than June 2015, but 10.1 percent from May 2016.
• Nonfat dry milk output was 144 million pounds, down 13.2 percent from a year earlier; skim milk powders were 55.3 million pounds, up 59.5 percent.
July global dairy price index
Global consumers paid more for dairy products in July, but prices remain well below recent years, according to the latest United Nations’ Food and Agriculture Organization (FAO) Food Price Index.
The July 2016 FAO Dairy Price Index increased 3.2 percent from June, with butter leading the price rise. The dairy index includes global average prices for butter, cheese, and skim milk and whole milk powders. PD
-
Dave Natzke
- Editor
- Progressive Dairyman
- Email Dave Natzke
