Dairy Australia Fortnightly Issue 17 - 10 September 2010
Competion for milk in the United States has driven butter prices to a six year high of $2.18/lb (US$4,806/t). In a number of cases processers have found it more profitable to sell their cream to other users, rather than churn butter themselves. Cheese prices are also up significantly, although there are some questions as to why, given commercial cheese stocks have been building in recent months. One of the reasons believed to have contributed to rising cheese prices has been the increasing volume of cheese being used on pizzas and in fast food. [When dairy commodity prices peaked in 2007, many food service operations cut the amount of cheese they used to remain price competitive]. US milk powder markets have also firmed on good butter and cheese prices.
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Dairy Australia Fortnightly Issue 16 - 27 August 2010
The USDA.s latest milk production report estimates production of 7.26bn litres during July, up 2.8% or 202m litres on July 2009. Milk per cow increased 3.3% on last year to 1,802 lb, while the US herd increased 20,000 head to 9.145m cattle - but remains 43,000 head smaller than in July 2009. Year to date US milk production has just ticked over 50bn litres, 1% or 571m litres ahead of the corresponding period last year. Production expectations for 2010 have increased by 300m litres to 84.55bn litres because of a sharp influx of new cows.
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Dairy Australia Fortnightly Issue 15 - 13 August 2010
Weighted results for Fonterra.s August globalDairyTrade decreased a further 8.3% from the July auction. Prices were more aggressively discounted in contract period 1 across all product categories, reflecting near term uncertainty and buyer caution. But average results for contract period 3 (Feb2011 . Apr2011) decreased by a smaller margin, with WMP contracts posting a modest 2.3% gain. The weighted average WMP was US$2,974/t (down 7.7% from July), while the Australian product (1,000t offered) closed at US$2,770/t, after opening 20% below the previous auction closing price [opening prices are usually 15% below the previous closing price]. In contrast 37,000t of NZ WMP was offered . achieving US$2,917/t (-14.8%) for Contract Period 1, US$2,936/t (-8.7%) for CP2, and US$3,186/t (2.3%) for CP3. SMP continued to decline with average prices falling a further 8.9% to US$2,770/t and average AMF prices declined 7.6% to US$4,302/t. The August auction was the first time buttermilk powder (BMP) was sold on the platform, achieving US$2,905 . a result inline with Dairy Australia surveys of Australian dairy exporter sales. This auction extended for 7 bidding rounds over 1:28.
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Dairy Australia Fortnightly Issue 14 - 30 July 2010
The United States Department of Agriculture.s (USDA) latest milk production report estimates production of 7.19bn litres during June, up 2.4% or 170m litres on June 2009. Milk per cow increased 3.7% on last June, while the US herd increased 11,000 head to 9.122m cattle. Despite the increase in herd size this month, the US herd is 108,000 smaller than the same time last year. Year to date, US milk production stands at 42.75bn litres, 0.8% ahead of the corresponding period last year. Production expectations for 2010 have increased to 84.2bn litres due to a larger herd and increased cow productivity. However, the domestic US market is short on butter [supporting global market fat prices] because the fat content of milk being produced has dropped.
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Dairy Australia Fortnightly Issue 13 - 16 July 2010
The dairy sector is forecast to remain one of the fastest growing agricultural sectors according to the latest OECD/FAO outlook. Economic recovery and increasing consumption of dairy products in the developing world are expected to expand dairy markets and increase global prices. While dairy commodity prices are forecast to remain higher than average [achieved over the 1996-2007 period], they are not expected to surpass average 2007-08 levels unless a supply shock occurs. The OECD/FAO report can be accessed from www.agri-outlook.org
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Dairy Australia Fortnightly Issue 12 - 2 July 2010
The US Dairy Export Council (USDEC) has written a letter to NZ Agriculture Minister David Carter expressing .deep concern. at Fonterra.s proposal to allow trading of cooperative shares between farmer suppliers . because it would .lock in Fonterra.s near-monopoly position and use that dominance to capture an unfair share of foreign dairy markets.. Minister Carter rejected the USDEC suggestion of Fonterra.s .near-monopoly. position. It would appear the USDEC letter is part ongoing negotiations surrounding the Trans Pacific Partnership trade deal.
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Dairy Australia Fortnightly Issue 11 - 18 June 2010
The EU Commission held its latest tender for intervention stocks of butter and SMP overnight, in which almost 12,000t of butter was sold, but all bids for SMP were rejected for the second consecutive tender. The 11,935t of butter sold at this month.s tender ranged in price from US$4,336/t . US$4,658/t, a premium to current market prices. SMP tenders were below the asking price of US$2,860/t, so the Commission rejected all bids.
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Dairy Australia Fortnightly Issue 10 - 4 June 2010
Overnight the EU Commission sold 11,500t of government-owned butter back onto the market at prices between US$4,200-4,700/t. This was in line with market prices. There were also bids for the purchase of 49,000t of SMP but they were rejected by the Commssion due to low prices offered. The next tender will be on June 17.
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Dairy Australia Fortnightly Issue 9 - 21 May 2010
Total US milk production in April topped 7.2 billion litres, up 1.5% from a year ago. In the first quarter of the year, US milk production was down 0.1% vs. a year ago. The US is at the beginning of an expansion phase. This phase should be tempered by tighter margins for farmers than in previous expansion periods. Production was up fractionally in California, the first gain in 17 months. Meanwhile, in the 2nd largest milk state, output was up 6.2% in Wisconsin.
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Dairy Australia Fortnightly Issue 8 - 7 May 2010
Following the May trading event, the gDT-TWI index was down 0.8%, reflecting steadier market. The average price achieved across all contracts and contract periods for WMP was US$3,932/tonne FAS, 1.2% lower than in April event. For AMF the average price was $5,020/tonne, 4.4% higher than in April. For SMP, the average price was $3,612/tonne, 1.4% lower than in April.
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