Title: Dairy Price Risk Management Milk Market Outlook
1Dairy Price Risk ManagementMilk Market Outlook
Cooperative Extension Ag and Natural Resources
Farm and Risk Management Team
Last Update May 1, 2009
2Monthly Basis
3Q Whats a Good Price?
A It All Depends..
4Outlook Information
- Milk Production Report
- Issued by NASS (USDAs National Agricultural
Statistics Service) mid-month covering previous
month - Milk cow numbers, Milk per cow, and total milk
production - Monthly data for 20 selected states representing
about 85 of U.S. milk production - Quarterly data for all states
5NASS Milk Production Report Mar 09
Milk Cows and Production By State,
March 2008-2009 --------------------
--------------------------------------------------
---------- Milk Cows 1/ Milk
Per Cow 2/ Milk Production 2/
----------------------------------------------
----------------------- State
Change 2008 2009 2008
2009 2008 2009 From
2008 ----------------------------
--------------------------------------------------
-- 1,000 Head ---- Pounds
--- Million Pounds Percent
AZ 186 190
2,190 2,090 407 397 -2.5
CA 1,842 1,822 1,975 1,920
3,638 3,498 -3.8 CO
126 128 1,945 1,980 245
253 3.3 FL 120 116
1,655 1,680 199 195 -2.0
ID 540 549 1,885 1,810
1,018 994 -2.4 IL
102 102 1,640 1,675 167
171 2.4 IN 166 167
1,700 1,750 282 292 3.5
IA 216 215 1,730 1,730
374 372 -0.5 KS
115 122 1,790 1,820 206
222 7.8 MI 345 354
1,870 1,890 645 669 3.7
MN 463 468 1,630 1,645
755 770 2.0 MO
110 108 1,300 1,320 143
143 NM 340 333
1,990 2,110 677 703 3.8
NY 626 623 1,690 1,670
1,058 1,040 -1.7 OH
280 277 1,560 1,590 437
440 0.7 OR 114 114
1,700 1,695 194 193 -0.5
PA 549 550 1,680 1,670
922 919 -0.3 TX
408 430 1,800 1,850 734
796 8.4 UT 85 85
1,720 1,720 146 146
VT 140 137 1,590 1,555
223 213 -4.5 VA
98 97 1,590 1,590 156
154 -1.3 WA 245 239
1,990 1,960 488 468 -4.1
WI 1,251 1,256 1,660 1,685
2,077 2,116 1.9
23-State
Total 8,467 8,482 1,794 1,788
15,191 15,164 -0.2 --------------------
--------------------------------------------------
---------- 1/ Includes dry cows, excludes
heifers not yet fresh.
2/ Excludes milk sucked by calves.
6Milk Cow Inventory
7Milk per Cow
8Milk Production Trend
9Outlook Information (Cont.)
- Milk/Feed Price Ratio
- Pounds of 16 dairy ration equal in value to one
pound of milk - Published around the first of the month as part
of NASS monthly Agricultural Prices - Dairy Product Stocks
- Commercial and government-held inventories of
butter, cheese (by category) and NDM - Published as part of NASS monthly Cold Storage
Report
10Milk-Feed Price Ratio
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14Outlook Information (Cont.)
- Dairy Product Production
- Monthly factory production of all major dairy
products, U.S. and major states - Published by NASS around the first of the month
for second preceding month - Dairy Product Prices
- Weekly prices and weights used to calculate all
Federal Order Class prices - Covers Butter, Block and Barrel Cheddar Cheese,
Nonfat Dry Milk, and Dry Whey - Issued by NASS Friday am covers week ending the
previous Saturday
15US Production of Major Manufactured Dairy
Products, Jan-Feb 2009 v. Year Earlier
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19Chicago Mercantile Exchange (CME) Daily Cash or
Spot Markets
- Grade A butter
- Block and barrel cheddar cheese
- Grade A and extra-grade nonfat dry milk
- Auction markets bids and offers with sale when
a bid is filled or an offer is accepted - Reported price changes with a sale, an unfilled
bid, or an uncovered offer - Thin markets sales represent only a small
fraction of production - Reference markets prices for off-market
contractual sales tied to CME prices
20Outlook Information (Cont.)
- Commercial Disappearance
- Imputed consumption includes pipeline stocks
as well as sales - Published monthly by USDAs Economic Research
Service - Retail Dairy Prices
- Prices and price indices for major dairy
products national and regional - Published monthly by Bureau of Labor Statistics
(BLS)
21Change in Commercial Disappearance, Nov 08 -
Jan 09 v. Year Earlier
222000 and 2001 are USDA Forecasts
23Sources of Outlook Information
- Dairy Market News
- Includes up-to-date information on all important
outlook indicators - Issued weekly on Friday. No longer available in
hard copy, but can be accessed free at - http//www.ams.usda.gov/dairy/mncs/weekly.htm
- NASS Reports
- Subscribe to individual reports(varying
subscription charges and release dates) or access
free at - http//www.usda.gov/nass/
24Sources of Outlook Information
- Internet Sites
- U-W Madison, Dept. of Ag. And Applied Econ.
- http//www.aae.wisc.edu/future/
- Links to all contracts and exchanges
- Charts and tables updated daily as new info
released - Includes excellent interactive tutorial on
futures and options trading - Downes-ONeill Dairy Team
- http//www.dairy.nu/
- Very quick access to current futures and options
quotes - Includes market analysis daily summaries and
forecasts
25Sources of Outlook Information
- Internet Sites (Cont.)
- Penn State University Ken Bailey
- http//www.aers.psu.edu/dairyoutlook
- Long-range price forecasts
- Good links to all USDA reports
- Weekly market analysis
- National Program for Integrated Dairy Risk
Management Education and Research - http//www-agecon.ag.ohio-state.edu/faculty/cthrae
n/idmer/Default.htm - Not an outlook site, but contains a wealth of
educational materials on risk management in
general and futures and options specifically
26Consensus(??) Milk Price Outlook 2009 Dairy
Cow Numbers Milk/Feed Price
ratio Stocks Cheese
Butter Product Prices Cheese
Butter
Nonfat Dry Milk Total Milk
Supply Commercial Use Other???