Al6-Lancaater Farming, Saturday, December 11, 1999
GRAIN. CATTLE, HOG,
& MILK BFP
FUTURES MARKETS
Markets Courtesy Of Chicago Board and Mercantile Exchange
Corn
Daily Prices As of
Symbol: C
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
Total
12/08/99
Soybeans
Daily Prices As of
Symbol:S
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
Total
12/08/99
Weekly Dairy Market Outlook
USDA Announces Shocking Drop in BFP
KEN BAILEY
Penn State University
•November BFP is $9.79/
cwt.
•Last time BFP this low
was August 1978
•Support price for milk is
$9.80/cwt at 3.5%
•CME cheese hovers at
support levels
USDA today announced
November’s Basic Formula Price,
or BFP, at $9.79 per cwt for milk
testing 3.5 percent butterfat.
According to my records, the BFP
has not been this low since
August 1978 when it was $9.68
per cwt. That was a long time ago.
For all practical purposes, the
November BFP is right at sup
port of $9.80 per cwt (also at 3.5
percent butterfat). The November
BFP fell $1.70 per cwt from the
month before and is a whopping
$7.05 below a year ago.
So why is the November BFP
at such low levels? I was predict
ing a BFP above $lO per cwt. The
November BFP is equal to the
October base month price of
$11.99 per cwt plus the
cheese/powder price adjustment
formula equal to -$2.20. The base
month price is what unregulated
processors (mainly cheese proces
sors) in Minnesota and Wisconsin
paid for milk. The butterfat level
in those states for October was
pretty high (3.94 percent) and the
CME cheese price was $1.3031.
So, the higher butterfat test had
the impact of lowering the base
price down when adjusted to a 3.5
percent butterfat level
The negative price adjustment
(Closing bids: Wednesday, December 8, 1999
- Thuisday, 9 December
Volume Open_lnt
46867 387698
Thursday, 9 December
High
4724
4800
4860
4920
4920
4910
4970
5200
Open
4716
4790
4850
4920
4920
4910
4964
5200
Volume Open_lnt
48673 159298
factor (-$2.20) primarily reflects
the change in cheese prices
between October and November
The NASS survey cheese price in
October was $1,4388 per pound
and the price in November was
$1.2143. Given what a 100
pounds of milk is worth based on
these cheese prices, the adjust
ment factor fell $2.20 per cwt.
This suggests that the BFP
could fall more next month. Why?
Because the November base
month price will likely fall from
October levels and we will have
another negative price adjust
ment since cheese prices fell
between November and
December. My estimate is that
the base month price for
November will be $10.66 per cwt
and that the price adjustment for
November through December
will be -$0.96. That will give a
December BFP of $9.70 per cwt.
The December CME BFP futures
as of December 3 was $9.90 per
cwt.
The cash market at the CME
showed little change from the
week before. Cheese prices are
basically at support. The support
price for 40-pound blocks is $l.lO
per pound and the support price
for barrels $1.07. No cheese went
into the price support program
this week. Block prices at the
CME remained at $1.12 per
pound and barrel prices at
$1.1075. Western prices are about
2-4 cents per pound lower.
The good news is that the final
numbers are m for commercial
disappearance for the third quar
ter of 1999 (July - September).
Milk production during this pen-
Last Chge
1860 -24
1972 -26
2042 -30
2110 -26
2174 -30
2240 -32
2270 -32
2284 -30
2352 -30
2440 -24
2500 -20
Last Chge
4594 -124
4666 -126
4732 -124
4794 -116
4794 -120
4802 -114
4862 -100
5130 -72
LOW
4590
4664
4730
4790
4790
4802
4860
5130
numbers continue to decline, and
cheese stocks continued to fall, we
could see cheese prices turn the
corner sometime in early
January. The next indication
Lean Hogs
Daily Prices As ol
Date
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
Composite Volume
12/08/99 10991
Live Cattle
Daily Prices As ol
Date
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
12/09/99
Composite Volume Openjnt
12/08/99
od was up 3.2 percent. However,
consumption of dairy products
was up 11.4 percent for butter,
17.0 percent for American cheese,
8.1 percent for other cheese, 16.0
percent for nonfat dry milk, and
1.3 percent for fluid milk. This is
tremendous growth for the dairy
industry. The economy also grew
at the rate of 5.5 percent during
this period. Is there a connection?
Assuming the economy contin
ues to grow at some level below 5
percent in the fourth quarter, cow
Table 1. Chicago Mercantile Exchange Prices, Weekly Averages
3-Dec-99 26-Nov-99 19-Nov-99 12-Nov-99 5-Nov-99
Cheese.
500 lb. barrels
40-lb. blocks
Nonfat dry milk:
Extra Grade
Grade A
Butter.
Grade AA 0.9208
Source: Dauy Market News, AMS, USDA
(httpJ/www.ams. usda gov/dairy/nmcs/weekly. litm)
Table 2. NASS Weekly U.S. Average Survey Prices
Cheese:
500 lb. Barrels 1/
40-lb blocks
Butter
Nonfat dry milk
Dry whey 0.1875
Source Dairy Product Prices, NASS, USDA
(http //usda mannhb coniell.edu/reports/nassr/pnce/dairy/1999/)
1/ Adjusted to 39 % moistme
- Tlunsday, 9 Dceembci
Open High
5203 5210
5700 5720
5710 5720
6415 6440
6240 6285
6040 6065
5595 5597
5400 5440
0 5440
Dec 99
Feb 00
Api 00
Jim 00
Jul 00
Aug 00
Oct 00
Dec 00
Feb 01
Open_lnt
55326
- Thmsday, 9 Dcccmbci
Open High
7045
7010
7162
6962
6940
7115
7225
Dec 99
Feb 00
Api 00
Jun 00
Aug 00
Oct 00
Dec 00
13114
Oats
Daily Prices As of
Symbol;o
12/09/99 DEC 99
12/09/99 MAR 00
12/09/99 MAY 00
12/09/99 JUL 00
12/09/99 SEP 00
12/09/99 DEC 00
Total
12/08/99
Volume Open_lnt
2107 12055
Soybean Meal
Daily Prices As of
Symbol;SM
12/09/99 DEC 99
12/09/99 JAN 00
12/09/99 MAR 00
12/09/99 MAY 00
12/09/99 JUL 00
12/09/99 AUG 00
12/09/99 SEP 00
12/09/99 OCT 00
12/09/99 DEC 00
Total
12/08/99
what of what is to come will be
December 20 when the cold stor
age report is released.
1.1075 1.0975 1.0975 1.1085 1.1930
1.1200 1.1200 1.1220 1.1170 1.2150
1.0300 1.0300 1.0300 1.0300 1.0300
1.0300 1.0300 1.0300 1.0300 1.0300
27-Nov-99 20-Nov-99 13-Nov-99 06-No v-99 30-Oct-99
1 0966
1 1426
1.0341
1.0136
Last
Low
Last
Low
6980
6957
7132
6900
6892
7085
7200
6977
6952
71 17
6895
6885
7085
7200
7050
7020
7172
6962
6945
7115
7225
127059
- Thursday, 9 December
High
1036
1122
1164
1150
1196
1252
Open
1034
1120
1164
1150
1196
1252
- Thursday, 9 December
Volume
28059
1.0100 1.0683 1.0983 1.0933
1.2056
1 2396
1 0768
1.0189
0 1925
1.1443
1 1833
1 0660
1 0158
0 1925
Prev.
Ghge
Volume
3024
5979
I ISO
546
102
87
49
22
-57
undi
+5
+4O
Prev.
Chge
Volume
3010
6653
1915
763
653
74
46
Low
1030
1114
1160
1144
1194
1252
Last
1030
1120
1162
1144
1194
1252
Open_lnt
104875
For more information on dairy
outlook, see my web site at:
http ://www. aers.psu.edu/dairy
outlook/
1 2299
I 2806
1 0678
1 0181
0.1924
Prev.
G|ien_lnt
10743
27570
8633
5174
1601
968
507
126
Prev.
Opcnjnt
19451
55287
28793
12259
5787
2837
2645
Chge
+ 2
-2
-2
-2
-2
unch
1.2490
1 3126
1 0534
1 0170
0 1968