November milk prices not likely to be matched in the forseeable future

Wisconsin's average gross price for milk shipped in November is expected to be $20.80 per hundred - 90 cents higher than the average for the United States and $2.20 higher than in November 2010, according to the monthly pricing report issued by the Wisconsin field office of the National Agricultural Statistics Service.

Of the top 23 milk producing states, only California, Idaho, Minnesota and Washington joined Wisconsin in having a predicted increase from October to November on the average gross price for milk, the report indicated. Wisconsin's November price is up by 40 cents from October while Minnesota jumped by 80 cents to $21.30 per hundred for November.

The November prices for other states included $21.70 per hundred for Pennsylvania, $21 for New York, $20.80 for Michigan, $19.60 for Texas, $18.60 for Idaho, $18.40 for California and $17.90 for New Mexico. The average United States gross price of $19.90 for November is the same as it was for October.

Significantly higher butterfat content in the milk served to boost the gross prices in many states. Among the butterfat averages reported for November were 3.89 in Texas (milk from Jerseys is a significant influence), 3.85 percent in both Pennsylvania and Minnesota, 3.83 in New York and 3.8 in Wisconsin. The national average for November was 3.79 percent butterfat.

A Class III milk cash price of $19.07 per hundred was announced last week Friday for milk shipped in November. This is an increase of $1.04 from October and is the same as the September price. Other milk class prices for November are $18.49 for I, $19.26 for II and $17.87 for IV.

Based on the November all-milk gross price of $19.90 per hundred, a milk to feed price ratio of 1.90 was calculated. The feed prices used in the ratio were $6 per bushel for shelled corn, $11.50 per bushel for soybeans and $198 per ton for dry alfalfa hay. Dairy economists indicate that a milk to feed price ratio of about 3.00 is needed to produce milk profitability if a significant amount of those dairy ration ingredients are purchased.



Spot market

prices sliding

Following the November prices, however, is the prospect of lower prices for up to two years as is indicated for the short term by a recent daily slide in the spot market prices for Cheddar cheese on the Chicago Mercantile Exchange and in the long term by the Class III milk futures prices through November 2013.

Starting on Wednesday of last week, the spot market prices fell on every day through Tuesday of this week. Including the drops of 4.75 cents per pound for Cheddar blocks and 4.5 cents for Cheddar barrels on Tuesday, the prices fell by 12.75 cents for blocks and 17.5 cents, respectively during that period for closing prices of $1.6850 and $1.64 per pound.

The spot market continued to be active on trades as the prices fell. Five carloads of barrels were sold on Monday of this week and another 10 changed hands on Tuesday while an offer of two carloads was not covered and a bid for one carload was not filled. Two carloads of blocks were sold on Tuesday.

The AA butter spot market was very active again early this week. Twelve carloads were sold on Monday and a bid for four carloads was not filled and another four carloads were sold on Tuesday with a bid for two carloads not being filled as the price rose slightly to $1.64 per pound.

A dairy sector continuing to show price strength is the dry whey futures market. Closing prices on Tuesday of this week were 64.6 cents per pound for December, a high of 66 cents in February 2012, and a price of no lower than 53 cents for any remaining month of 2012.

In the Class III milk futures, however, prices drop after the $18.50 per hundred that was on the board for December at the market close on Tuesday of this week. Prices drop to the lower $17s and high $16s per hundred for all of 2012 and are averaging a bit over $16 per hundred for all months of 2013.



Largest dairy firms identified

A recent summary provided by the Milwaukee Cooperative Milk Producers identified the largest dairy firms in the world and in North America based on their revenues for 2010. The four categories for the five largest in each were: world dairy firms, the publicly and privately held companies and the dairy cooperatives in North America.

Around the world, Nestle's, based in Switzerland, is easily the largest dairy firm with $28 billion in revenues in 2010. Other firms, their home country, and 2010 revenues in the top five were Dannon (France) at $16.4 billion, Fonterra (New Zealand) at $12.1 billion, Lactalis (France) at $12 billion, and Friesland/Campana (The Netherlands) at $11.7 billion.

Among the publicly-held dairy companies in North America for 2010, Dean Foods, headquartered in Dallas, TX, dominated with $12.123 billion in revenues. Following were Saputo Inc. (Saint-Leonard, Quebec, Canada) at $5.506 billion, Kraft Foods Global (Northfield, IL) at $4 billion, Kroger Co. (Cincinnati, OH) at $2.3 billion, and ConAgra Foods (Omaha, NE) at $771 million.

Schreiber Foods of Green Bay was the top privately held dairy company in 2010 with revenues of $3.6 billion. Others in that group were Leprino Foods (Denver, CO) at $3 billion, HP Hood LLC (Lynnfield, MA) at $2.4 billion, Great Lakes Cheese (Hiram, OH) at $1.9 billion, and Hilmar Cheese (Hilmar, CA) at $1.3 billion.

Among the dairy cooperatives in North America, Land O'Lakes (St. Paul, MN) stood at the top in 2010 with revenues of $3.708 billion. Following were Agropur (Longuieuil, Quebec, Canada) at $3.49 billion, Prairie Farms Dairy (Carlinville, IL) at $2.5 billion, Dairy Farmers of America (Kansas City, MO) at $2.333 billion, and Darigold (Seattle, WA) at $2.1 billion.