AlCMomcaster Farming, Saturday, November 20, 1999
GRAIN, CATTLE, HOG,
& MILK BFP
FUTURES MARKETS
Markets Courtesy Of Chicago Board and Mercantile Exchange
(Closing bids: Thursday, November 18, 1999
Corn
Daily Prices As of Thursday, 18 November
Symbol: C
11/18/99 DEC 99
11/18/99 MAR 00
11/18/99 MAY 00
11/18/99 JUL 00
11/18/99 SEP 00
11/18/99 NOV 00
11/18/99 DEC 00
11/18/99 JAN 01
11/18/99 MAR 01
11/18/99 JUL 01
11/18/99 DEC 01
Total
11/17/99
Soybeans
Daily Prices As of
Symbol: S
11/18/99 NOV 99
11/18/99 JAN 00
11/18/99 MAR 00
11/18/99 MAY 00
11/18/99 JUL 00
11/18/99 AUG 00
11/18/99 SEP 00
11/18/99 NOV 00
11/18/99 NOV 01
Total
11/17/99
KEN BAILEY
Penn State University
November 12,1999
Cheese Prices Hit Support
Cheese prices at the Chicago
Mercantile Exchange fell to sup
port price levels. Prices for 40-
pound blocks declined from
$1.1450 per pound on Monday,
November 8 to $1 10 on
Wednesday and Thursday,
November 10 and 11. Prices for
40-pound blocks then rebounded
to $1.1250 on Friday, November
12.
Barrel cheese prices at the
Chicago Mercantile Exchange
declined from $1.1375 on
Monday to $1.0975 by Friday.
The support price level for
block cheese, called the CCC
purchase price, currently is
$l.lO per pound. It’s $1.07 per
pound for barrel cheese. At those
prices the government stands
ready to purchase unlimited
quantities. But according to
USDA there were no sales of
cheese into the Commodity
Credit Corporation (CCC). The
CCC has not purchased cheese
under the dairy price support
program since June 1997.
The market is clearly react
ing to strong growth in milk pro
duction, high numbers of milk
cows, and strong growth in
cheese production. Last week
USDA announced American
cheese production for September
was up 15.8 percent above year
ago levels. And, cheese buyers
understand that the milk supply
won’t decline immediately since
farm-gate milk prices won’t
show the effects of lower cheese
prices until December (farmers
Open
1942
2050
2120
2184
2250
2312
2340
2364
2414
High
1950
2056
2126
2192
2254
2312
2346
2364
2414
2494
2550
2544
Volume Open_lnt
64320 469516
- Thursday, 18 November
Volume Open_Xnt
35962 164541
will get these lower prices mid-
January). That’s because the
Class I price under current fed
eral orders will peak in
November. The Class I mover is
equal to the Basic Formula Price
lagged two months. The
November Class I mover is
therefore going to be equal to
$16.26 per cwt. Local Class I
prices will equal the Class I
mover plus the Class I differen
tial.
It is also possible that cheese
prices will recover somewhat in
the weeks ahead. Cheese inven
tory is declining rapidly and
demand for the fourth quarter is
expected to be good. The GDP
(gross domestic product) and
Christmas shopping should be
very good despite initial esti
mates that October retail sales
were flat. Strong economic
growth and consumer spending
could result in higher sales of
dairy products, especially
cheese. That could pull cheese
prices higher into the $1.20
range before the end of the
month. The next cold storage
report will be issued November
19. Stay tuned as this will be an
important statistic for cheese
prices!
My estimates of the BFP in
Table 3 below are compared to
CME BFP futures prices as of
November 12, 1999. Outside of
January 2000, my estimates are
lower than the CME futures
prices. Therefore my numbers
should be considered worse case
estimates. Clearly the market is
Low
1922
2030
2102
2170
2240
2312
2330
2364
2406
2494
2540
Last
1924
2034
2106
2174
2242
2312
2334
2364
2410
2494
2540
Chge
-20
-16
-14
-10
-6
unch
-2
-4
-4
unch
Low
4550
4590
4660
4730
4784
4790
4784
4840
5150
Weekly Dairy Market Outlook
Lean Hogs
Daily Prices As of •- Thursday, 18 November
Date
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
Composite Volume
11/17/99 8599
Live Cattle
Daily Prices As of Thursday, 18 November
Date
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
11/18/99
Composite Volume Open_lnt
11/17/99 19117 130400
Oats
Daily Prices As of
Symbol:o
11/18/99 DEC 99
11/18/99 MAR 00
11/18/99 MAY 00
11/18/99 JUL 00
11/18/99 SEP 00
11/18/99 DEC 00
Total
11/17/99
expecting higher cheese prices
than I have forecast.
USDA also announced this
week a comparison between
actual federal order prices and
prices under the final rule. A
federal injunction has temporar
ily suspended implementation of
the final rule. For October 1999
the Class 111 price was $11.49
per cwt (the October BFP), but
would have been $12.48 per cwt
under the final rule. The Class I
mover for October was $15.79
per cwt (August BFP), but would
have been $16.54 per cwt under
the final rule. For November the
announced Class I mover will be
Table 1. Chicago Mercantile Exchange Prices, Weekly Averages
12-Nov-99 5-Nov-99 29-Oct-99 22-Oct-99 15-Oct-99
Cheese:
500 lb. barrels
40-lb. blocks
Nonfat dry milk
Extra Grade 1.0300
Grade A 1 0300
Butter, Grade AA 1.0983
Source: Dairy Market News, AMS, USDA
( http://www.ams. usda.gov/dairy/mncs/weekly.htm).
Table 2. NASS Weekly U.S. Average Survey Prices
6-Nov-99 30-Oct-99 23-Oct-99 16-Oct-99 09-Oct-99
Cheese
40-lb blocks 1.2806
5001 b Barrels!/ 1.2299
Butter 1 0671
Nonfat dry milk 1 0173
Dry whey 0 1909
Source Dairy Pwduct Prices, NASS, USDA
(http -//usda mannhb Cornell, edu/reports/nassr/price/dairy/1999/)
I/ Adjusted to 39% moisture.
Open High
5050 5110
5365 5405
5390 5465
6080 6150
5975 5997
5745 5750
5340 5372
5237 5237
0 5292
Dec 99
Feb 00
Apr 00
Jun 00
Jul 00
Aug 00
Oct 00
Dec 00
Feb 01
Open_lnt
54819
Open High
7047
7100
7215
6980
6955
7052
7247
7035
7090
7190
6945
6915
7030
7247
Dec 99
Feb 00
Apr 00
Jun 00
Aug 00
Oct 00
Dec 00
- Thursday, 18 November
Open
1074
1170
1216
1194
1274
Volume Qpen_Znt
1690 13119
, , Q . . , For more information on
BFP) bSt r would have been ddry outlook, see my website at:
$12.90 per cwt under the final http://www.aers.psu.edu/dairy
rule. outlook/
Table 3
Nov 99
Dec 99
Jan 00
Feb 00
Mar 00
Apr 00 1.1700 10.87
May 00 1.1500 10.69
1/ CME BFP Milk Futures, Nov. 12, 1999.
1.1085 1.1930 1.2380 1.2705 1.2310
1.1170 1.2150 1.2635 1.2840 1.2565
1 3126
1.2490
1.0534
1.0170
0.1932
Chge
Last
Low
Chge
Last
Low
7042
7097
7212
6977
6955
7040
7210
6997
7042
7160
6920
6902
7025
7200
High
1080
1174
1216
1194
1234
1274
Low
1072
1166
1216
1194
1234
1272
Basic Formula Price Forecasts
CME Block My BFP
Cheese Prices Forecast
$/lb $/cwt
1.1488 10.38
1.1800 10 23
1.2000
1.1800
1.1800
1.0300
1.0300
1.0675
1 0300
1.0300
1.0933
1.3518
1.2530
1.0414
1.0201
0 1976
Prev.
Volume
4054
2739
1314
361
61
27
29
14
Prev,
Open_lnt
22742
18633
7361
3871
1381
586
208
34
Prev.
Open_lnt
43253
42771
25173
9708
4455
2619
2421
Prev.
Volume
9841
5085
2061
748
269
74
1039
Chge
Last
1074
1170
1216
1194
1234
1272
-2
unch
-2
-10
-6
BFP
Futures 1/
$/cwt
10 50
10 85
11 20
11.35
11.51
11.65
11.60
11.63
11.03
10.97
1.0300
1.0300
1 0850
1.0300
1.0300
1.0233
1.4462 1 5305
1.3324 1,4340
1.1121 i 1835
1.0182 1.0193
0.1942 0 1968