May milk prices could bethe lowest for 2012

Although it is increasingly being discounted as a valid measure of profitability for dairy farmers, the milk to feed cost ratio of 1.38 for May is the lowest since that number was first calculated in 1985.

The ratio is based on the national average all-milk price of $16.40 per hundred for May that was announced this week, along with feed costs of $6.22 per bushel for shelled corn, $13.70 per bushel for soybeans, and $215 per ton for dry alfalfa hay.

Dairy farmers in several of the top milk production states, however, are expected to receive average prices that top the national average for May.

Those include $17.30 per hundred in both Wisconsin and New York and $17.80 in Pennsylvania. Falling below the average are California at $14.60 and Idaho at $16.30 per hundred.

Compared to May of 2011, the Wisconsin average is down by $1.60 per hundred while the national average is $3.20 per hundred lower. From April of this year, the declines are 30 cents for Wisconsin and 40 cents for the nation.

The national Class III milk price for May, announced on Tuesday of this week, is $15.23 per hundred. That is down from the $15.72 per hundred for both March and April of this year and the $16.52 for May of 2011.

Other milk class prices for May are $15.19 for Class II and $13.55 for Class IV (a major reason for the low milk price in California).

Based on recent trends in dairy commodity and Class III milk futures prices, however, the May prices should be the lowest for this year.

Price gains continue to be posted in the spot market for non-fat dry milk, in the dry whey futures, and for Cheddar block cheese.

The Cheddar block price has been volatile in the spot market on the Chicago Mercantile Exchange during the past week, however.

It had risen to $1.65 per pound on Friday, June 1 before falling by a total of 7 cents per pound on Monday and Tuesday of this week and then rebounding by 2.25 cents on Wednesday of this week to close at $1.6025 per pound.

Spot market activity has been relatively light in recent days. There was one carload sale of Cheddar blocks on Wednesday and one unfilled bid to buy Cheddar barrels as the price held at $1.5225 per pound.

The AA butter price slipped by .50-cent to $1.4050 per pound after one carload sale and one uncovered offer on Wednesday.

Non-fat dry milk spot market continued to recover from their year's low, including a 3-cent per pound gain on an unfilled bid to buy one carload of Grade Extra as its price moved to $1.12 per pound.

The Grade A price remained at $1.19 per pound following one unfilled bid to buy and one uncovered offer to sell on Wednesday.

Dry whey futures prices posted gains for all months from June through December on Wednesday. This put the prices at 51 cents per pound for June and 50 cents for July before they decline to 46 cents by November and drop just below 40 cents by March of 2013.

Despite a bit a strength in the commodity prices, the Class III milk futures for June through August lost ground on Wednesday while all other months through March of 2013 posted gains.

The maximum per hundred price changes for any month were 15 cents per hundred.

Class III futures closed at $15.47 per hundred for June on Wednesday and in the lower half of the $16s per hundred for all subsequent months through January of 2013.

The prices for the remainder of 2013 were holding in a tight range of the low $16s and high $15s per hundred.

A report covering four federal milk marketing orders, which account for nearly 50 percent of milk production in the United States, indicates that the bulk tank weighted average somatic cell count (SCC) for 2010 was 224,000 per milliliter - down from the 258,000 average in 2005.

Of the sampled milk, between 1 and 2 percent exceeded the acceptable limit of 750,000 SCC and 89.5 percent would have qualified under the 400,000 SCC standard that might be adopted in 2013 by the National Conference on Interstate Milk Shippers.

Two more announcements were made within the past week by Cooperatives Working Together on the receipt of requests for financial assistance on the export of dairy products.

A batch of eight requests filed by Bongard's Creamery, Dairygold Cooperative, Foremost Farms, and United Dairymen of Arizona totals 1.938 million pounds of Cheddar and Monterey Jack cheeses to be sent to countries in Asia, North Africa, and the Middle East from June to November.

The second announcement covers 14 requests by Dairygold, Land O'Lakes, Foremost Farms, United Dairymen of Arizona, and the Maryland and Virginia Milk Producers Cooperative.

Those requests were to ship 1.664 million pounds of butter and 875,235 pounds of Cheddar and Monterey Jack cheeses to countries in Central America, Asia, North Africa, and the Middle East by November.