Milk Market News
BY TOM JURCHAK
Lackawanna Extension
What Goes Down
SCRANTON (Lackawanna)
The Minnesota-Wisconsin Price
Series, that had dropped $1.29 in
three months from $12.27 to
$10.98 responded to the SO cent
change in.the support price on
April 1 With an increase of 11
cents to $11.09 for April. That’s
not SO cents but it’s more than
most forecasters had predicted.
Remember, this is only a" three
month increase in the support
price during the Spring flush and
will drop back SO cents on June
30. With inventories generally
adequate, buyers of storable dairy
products might have been
expected to wait it out rather than
bid up the price now. That didn’t
happen and all during April and
into May, began improving espe
cially on barrel cheese. That price
in early April was $1.14 a pound
and now has advanced five cents
to $1.19 well over $1.16 the new
support price. Block cheese prices
were much slower to start increas
ing and didn’t make their best
gains until May but arc expected
to exceed the $1.20 support price
this month.
Powder prices also advanced
last month from 79 to 81 cents but
larger increases are expected, this
month to match the world prices
that now range from 81 to 90
cents. The new support price for
powder is 79 cents but the market
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was never below that level since
last September. Butter is still
going nowhere with the" market
price one cent under the $1.32
support price. Even so, the April
M-W at $11.09 is 26 cents above
the new support price of $10.83
and 76 cents belter than last April.
Cheer Up
So, there’s the bright situation
you were hoping for to cheer you
up after all that rain that kept you
out of the fields for most of May.
It’s no substitute for Spring plow
ing and planting but enjoy it while
you can. You may be disappointed
that the M-W increased only 11
cents in April but all the market
signs seem to be pointing to better
prices in May and June. And when
was the last time you saw product
prices increasing in the Spring?
Not since 1980, the last year you
were enjoying a support price of
80 percent of Parity with adjust
ments going up every six months
in October and April.
More
Disappointment
If you were disappointed with
the 11 cent increase in the M-W
you’ll be even more disappointed
with the 36 cent drop in the Uni
form Price in Order 2 in April.
Here again, however, the esti
mates were much lower than the
$11.59 you got mainly on the
strength of the higher M-W that
gave you a seven cent increase in
Class II milk which was over 62
percent of the pool in April. Your
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Louisville Plan take out increased
10 cents this month so the change
in the market price was only 26
cents less.
You also have to understand the
lag between wholesale market
prices of butter, powder and
cheese has to be reflected to the
M-W price before setting the
Class prices handlers pay in Fed
eral Orders. Even then there’s an
additional two month lag on Class
I juices so the increases you find
in your milk check will come
some time after an increase in the
support price or the maiket price
and will continue after the
decrease, f keep referring to mark
et changes in the product prices
each month so you’ll know what
to'expect in the future - whether
it’s good or bad news. This month
the future outlook - for a few
months, at least -- is good even
though you won’t see it in your
milk check this month.
Cheer Up,
Again
What you will see in your milk
check this month is a price that is
67 cents higher than last April.
The difference had been dropping
each month from 92 cents in Janu
ary to 66 cents in March. Now it
will start back up for the rest of the
Spring and Summer months. And
that in spite of the fact that milk
production continues to increase
over last year’s record high even
with higher feed costs. Production
was higher nationally in March by
two percent; higher in Order 2 by
nearly four percent and higher in
Pennsylvania by five percent.
How long this will last is hard to
predict without knowing what the
weather will be this summer, but
from last year’s experiences feed
prices will have to go higher or
milk prices lower to slow down
production.
Thank Cheeses
According to USDA’s Outlook
and Situation report, increasing
demand for cheese may be able to
absorb the increasing milk pro
duction but that’s assuming the
increase will stay at two percent
What appears to be more encour
aging each month is the world
demand for powder that has main
tained a steady increase for eight
months but no one wants to pre
dict how long this will last Until
last Fall we’ve never been able to
compete in world dairy markets
because of our high support
prices. Even now the world price
of butter is 81 to 88 cents com
pared to our support price of $ 1.32
a pound. Even Cheddar cheese
sells internationally for 79 to 88
cents while our support price is
$1.16 a pound for 300 pound
barrels.
Because we have import quotas
on dairy products to protect our
domestic markets, you are insu
lated from these low priced for
eign products. But it does make
you wonder where is all that
cheaper powder if someone is sell
ing butter for 81 to 88 cents? If
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you could make powder without
making butter we could solve
some of our own surplus butter
problems as long as the world
powder price stays between 81
and 90 cents. '
Now there’s talk of removing
ull farm subsidies and import quo
tas as part of the negotiations of
the General Agreement on Tariffs
and Trade to facilitate world trade
in all farm products. Our wheat
and feed grains producers have
depended on exports for over half
of their sales for many years.
Dairymen, on the other hand, have
been priced out of world markets
and been protected from imports
by Section 22 of the Agricultural
Adjustment Act So, the idea of
removing farm subsidies and
increasing world trade sounds like
a good idea but the impact may
not be the same on all farm
products.
Generally, milk producer orga
nizations have not favored, or at
least were skeptical about, the
effect of the changes bging con
sidered by the GATT negotiators.
However, that was before the
mandatory milk quotas in Europe
that eliminated their surpluses and
opened the door for nine months
of exporting our own milk pow
der. Now dairymen have become
world traders 100 and even the
National Dairy Board - all dairy
men who run the milk promotion
program - think that “intcmalion
(Turn to Page A 37)
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