Weekly Dairy Market Outlook
March 2000, milk production was
up 4.0 percent and imports (on a
milkfat basis) were down 13.3
percent.
disappearance, a proxy for
demand, was up 4.4 percent on a
milkfat basis this same period.
These numbers suggest we sold
slightly more than we produced.
So why are milk prices still
relatively low? We began the
quarter with large carry in stock
levels. As a result, we also ended
the quarter the same way.
(Condnuod from Pago Al 6)
Still, sales of dairy products
were very good the first quarter of
2000.
Commercial
Butter consumption was up
6.4 percent; American cheese
consumption was up 3.5 percent,
and Other cheese consumption
was up 8.5 percent. Nonfat dry
milk consumption, however, was
down 21.9 percent.
Still, my bet is that the
following events will unfold:
demand for milk and dairy
products continues strong, butter
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prices remain high, U.S. cow
numbers peak and begin to
decline, and milk per cow slows
with the summer heat. If those
things happen, we should see
higher milk prices this summer!
Finally, USDA announced
June advance prices based on the
following two-week average
product prices on a per pound
basis: butter $1.1140, nonfat dry
milk $l.OlOO, cheese $l.lOll,
and dry whey $0.1755. These
prices were used to compute the
Class I base price of $11.70 per
cwt. The latter is derived from
the advanced Class IV skim milk
MONTHS 7.75%
pricing factor of $7.70 per cwt
and the advanced butterfat pricing
factor of $1.2195 per pound.
Class I differentials are added to
the Class I base price. The Class
II skim milk price for June is
$8.40 per cwt (the Class II nonfat
solids price is $0.9333) and is
based on the advanced Class IV
skim milk pricing factor of $7.70
Corrections: last week I
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Lancaster Farming, Saturday, June 3, 2000-A33
implied that the current futures
contract for butter is cash settled
It is not! That's why the new
Class IV contract may have a big
following; it is cash settled and
will likely follow the butter price
For more information on dairy
markets, see my website at;
http://www.aers.psu.edu/dairyoutl
ook/
MONTHS 8.5% MONTHS
15, 2000
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