CME: Farm Profitability Eroding This Autumn

US - Barrels sold off aggressively (-9.5¢), sending nearby milk futures into a tailspin. DEC and JAN were each down more than 50¢ this morning but came back to close at -37¢ and -33¢, respectively, writes Alan Levitt.
calendar icon 1 December 2011
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Cheese futures settled lower as well. Blocks fell “only” 4.25¢, which puts blocks back above barrels for the first time since 31 October.

Spot butter was offered a penny lower, leading to declines in butter futures. A total of 32 loads of butter have traded in the first three days of the week, making it already the most active week in more than a year-and-a-half. Whey futures continued to press higher.

Farm profitability shrunk for the fourth straight month in November. The All-Milk price was estimated at $19.90, unchanged from October, while feed costs increased about one per cent, according to USDA’s “Ag Prices” report released this afternoon.

The corn price increased 29¢/bushel to $6.00, but soybeans dropped 20¢/bushel to $11.50 and alfalfa hay declined $5/ton to $198.00.

Feed costs compute out to $11.06 per hundred pounds of milk, leaving “Income over feed costs” of $8.84/cwt., down from $8.97/cwt. in October. This is slightly below the 10-year average IOFC of $9.09/cwt. (see chart).

The California Weighted Average Price for NDM dropped 7.7¢ last week to $1.3894, the lowest price since late February.

Further Reading

- You can view the full report by clicking here.

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