A'
il6-Lancaster Farming, Saturday, August 25,2001
Markets Courtesy of Chicago Board and Mercantile Exchange
Closing Bids: Thursday, August 23,2001
Soybean Meal
Weekly Dairy Market Outlook
Ken Bailey
Penn State
Aug. 17,2001
Butter Prices
Keep Rising
• Grade AA butter reaches
Office Closed
Labor Day
On Labor Day, Monday, Sept.
3, Lancaster Farming office is
closed. The office will reopen
Tuesday, Sept. 4.
For the Sept. 8 issue, there
are some deadline changes:
Public Sale and Mailbox
ads, 5 p.m., Friday, Aug. 31.
Classified, Section D ads
5 p.m., Wednesday, Sept. 5.
Classified, Section C, Farm
Equipment ads, 9 a.m., Wednes
day, Sept. S.
General News noon,
Thursday, Sept. 6.
GRAIN. CATTLE. HOG
&MILKBFP
FUTURES MARKETS
$2.09,
• Cheese prices steady.
• July milk production down
1.2 percent.
• Dairy stocks a surprise!
It was a busy week for report
ing! The milk production and
cold storage reports were re
leased. The results are mixed
and paint a picture of a market
searching for direction. At the
moment, that direction is for
higher prices. However, the data
also had a few surprises.
First, let’s review the Chicago
Mercantile Exchange. Block
cheese prices remained steady at
$1.72 per pound. Barrels, how
ever, declined from $1.65 per
pound on Monday, Aug. 13, to
$1.63 by Friday, Aug. 17. One
shouldn’t read too much into
that. It could be that the market
was a bit long on barrels this
week.
Butter prices at the Chicago
Mercantile Exchange offered a
surprise. Grade AA butter rose
from $2.05 per pound on
Monday to $2.09 by Friday. The
cheese and butter prices are odd
when one compares them to
USDA’s Cold Storage report re
leased last week. Butter stocks
at the end of July were 145.4
million pounds, up 6.2 percent
over a year ago. Butter produc
tion through June of this year
was down over 8 percent relative
to a year ago.
What’s going on here? Well,
the combination of fewer cows,
reduced production per cow,
and summer heat has made but
terfat scarce. That has raised
both wholesale and retail butter
prices. That in turn has lowered
the consumption of butter, thus
raising stocks.
The bigger question is
whether butter stocks are going
to continue to grow because of
reduced retail consumption. If
they do, and milk production re
bounds just a bit, look for butter
prices to take a nose-dive some
time this fall.
USDA’s Cold Storage report
had just the opposite message
'for cheese. Stocks of American
cheese at the end of July were
down 19.7 percent. Total cheese
stocks were down 16.9 percent.
Lean Hogs
Daily Prices As ofThursday, 23 August
Date
Oct 01 5862 5900 5825 5875
Dec 01 5430 5492 5412 5485
Feb 02 5605 5650 5585 5620
Apr 02 5710 5780 5680 5770
May 02 6245 6290 6225 6290
Jun 02 6550 6572 6525 6572
Jul 02 6280 6315 6230 6315
Aug 02 6000 6050 6000 6050
Oct 02 5500 5520 5500 5510
08/23/01
08/23/01
08/23/01
' 08/23/01
' 08/23/01
08/23/01
08/23/01
08/23/01
08/23/01
Composite Volume Openjnt
08/22/01 8222 43668
Live Cattle
Daily Prices As ofThursday, 23 August
Date
Aug 01 7152 7180 7102 7117
Oct 01 7365 7375 7297 7312
Dec 01 7470 7485 7415 7455
Feb 02 7615 7637 7590 7610
Apr 02 7777 7797 7760 7790
Jun 02 7400 7435 7397 7420
Aug 02 7480 7495 7470 7485
08/23/01
08/23/01
08/23/01
08/23/01
08/23/01
08/23/01
08/23/01
Composite Volume Open_lnt
08/22/01 13425 103140
Pork Bellies
Daily Prices As ofThursday, 23 August
Date
08/23/01
08/23/01
08/23/01
08/23/01
08/23/01
08/23/01
Aug 01 9525 9540 9367 9367 -300
Feb 02 7775 7800 7700 7792 +2
Mar 02 7750 7820 7730 7820 . +25
May 0i 7900 7950 7900 7950 +6O
Jul 02 7950 7950 7950 7950
Aug 02 7875 7875 7875 7875
Composite Volume Open_lnt
08/22/01 904 2127
Through the month of June,
production of Anjerican and
Total cheese was down 4.8 per
cent and 1.6 percent, respec
tively. Unlike butter, cheese
consumption must be holding
up fairly well give these low
stocks numbers. That explains
why cheese prices are so firm.
USDA released the milk pro
duction report. Milk production
in July for 20 major dairy states
was down 1.2 percent over a
year ago. Production totaled
12.1 billion pounds. Product! jn
per cow averaged 1,555 pounds
in July, down 6 pounds over a
year ago. And cow numbers fori
20 major states in July was 7.75
million head, even with June
2001.
The futures markets at the
Chicaga Mercantile Exchange
attempted to digest all of this
market information. As of Aug.
17, the Class 111 futures rose
from $15.55 per CWT for
August 2001 to $15.60 for Sep
tember 2001. Thereafter it fell to
$l3 per CWT by December
2001. Class IV futures on
August 17 rose from $14.95 per
CWT for August 2001 to $15.50
Open High Low Last Chge
4612
2918
255
384
Open High Low Last Chge v o penjnt
2058 2981
6747 46465
3024 24020
897 16990
346 7148
227 5349
125 187
Open High Low Last Chge Prev * „ Pr f v *
Volume Openjnt
348 292
504 1787
< 48 ' 25
3 21
1 2
0 0
Prev.
Openjnt
26254
11450
3898
1304
308
309
94
39
12
+45
-15
for September 2001, falling to
$13.60 by December 2001.
The market is anticipating
that there will be some milk
supply response by the end of
the year. Clearly the milk supply
has been tight in August because
of the heat and humidity. Sep
tember milk will continue to be
tight as children return back to
school. But what if we assume
that cow numbers remain level
through year-end, and that milk
per cow rebounds 2 percent over
a year ago starting in October?
Milk production for 20 major
states will be 1.5 percent ahead
of a year ago by December.
What do you think this will do
to the milk price?