A32-Lancaster Farming, Saturday, April 29, 2000
FUTURES MARKETS
(Continued from page Al 6)
million head, 57,000 head more
than a year ago and 4,000 head
more than a month ago.
So where is all this extra milk
coming from? Surprisingly, just
about everywhere. In the west,
milk production is up as follows:
California (4.5 percent), Idaho
(12.7 percent), and New Mexico
(11.5 percent). In the Cornbelt,
Indiana was up a whopping 13.3
percent. In the Appalachian
region Kentucky was up 4.0
percent and Virginia was up 4.9
percent. In the Northeast,
Pennsylvania was up 4.2 percent
and Vermont was up 4.3 percent
The outlook for milk prices
will continue to remain bearish
(pessimistic) until the number of
cows on farms, and the milk
supply, begins to decline. The
market will be looking for growth
rates in the 2-2 5 percent rate
In the second market report,
USDA reported Thursday that
stocks of American cheese as of
March 31, 2000 were 530 2
million pounds, up 13 4 percent
from a year ago. And stocks of
total cheese were 727 3 million
pounds, up 12 7 percent. Cheese
stocks continue to grow month
over-month and year-over-year.
Farm Groups Comment On
USDA Meat Price Reporting
WASHINGTON—WhiIe
farm groups praised it, the na
tion’s biggest meat packers
blasted the USDA’s proposal for
mandatory livestock price re
porting saying it would be too
costly.
The criticism from privately
owned Cargill Inc. and Kraft
Foods, a unit of Philip Morris
Co., were among the hundreds
of comments in letters submitted
to the USDA as it considers
launching the new twice-daily
reporting of prices paid to farm
ers and ranchers.
Small and medium-sized live
stock farmers support the
USDA’s proposal, saying the
consolidation within the live
stock processing industry made
it harder to gauge commodity
Butter stocks also grew in March
from the month before, totaling
97.2 million pounds. But that's
10.4 percent below a year ago.
Sales of butter must have been
very good the first quarter of
2000.
I re-estimated my forecast of
milk prices for the remainder of
2000. Those forecasts are in
tables 2-4 below. I have reduced
the peak Class 111 price from over
$l3 per cwt to just over $12.50
per cwt in September and
October. My 2000 forecast for
the average Class 111 price will be
just $10.90 per cwt, compared to
$12.43 the year before.
I would not be surprised if my
forecast for the second half of the
year wereparticularly regarding
cheese prices and the Class 111
price. I would expect higher
prices if 1) the economy
continues to improve, 2) cow
numbers begin to level off and
decline, and 3) the summer heat
and dry weather slows the growth
m the milk supply.
For more information on
market and federal order data, see
my Penn State Dairy Outlook
website at;
http://www.aers.psu.edu/dairyoutl
ook/.
prices.
The proposed rule came at the
request of Congress after family
farm groups complained they
did not receive fair market
prices because large companies
dominate U.S. meat packing
purchases. The USDA is ex
pected to take several months to
review the suggestions and criti
cisms before finalising a price
reporting plan.
Four U.S. companies slaugh
ter 80 percent of all fed cattle, 55
percent of all hogs and 80 per
cent of all lambs, according to
the USDA.
The American Farm Bureau
praised the proposal for taking a
major step toward providing
producers with useful informa
tion.
Table 4 Class Price Forecasts under Older Reform, CWT Prices at 3 5 Percent Butterfat
Class I Base Price Class II Class 111
1999 2000 1999 2000 1999
Jan
Feb
Mar
Apr 1/
May 1/
Jun 1/
Jul 1/
Aug 1/
Sep 1/
Oct 1/
Nov 1/
Dec 1/
Yr. Avg
1/ Forecasts
Forecasts provided by Ken Bailey, Penn State University, April 21,2000
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