Compare the CME with Dairy Market News report on fluid milk in the East for September 2, 2009:
"Milk supplies are tight in the Northeast. Production declines are due to herd culling and typical seasonal reductions. Increased Class I demand, due to
school openings, is also limiting the available milk supply. Short supplies are
necessitating reduced production schedules and shorting contracts in some areas.
Tropical storm Danny had very little impact, skirting only the coastal areas.
Milk volumes are down in the Mid Atlantic area with plants scrambling to secure
enough supply to meet their contract needs. Balancing plants are working with
their contracted customers to adjust production schedules to better match
current supplies. Milk supplies in the Southeast are very tight. Reduced
availability from the Southwest and Mid Atlantic has heightened the shortened
supply."
Please keep in mind that the current support price for cheddar blocks is $1.31 and $1.28 for barrels. The lower market price (due to the huge dairy surplus) should trigger a large volume of cheddar sales to the government...as the program was designed to remove surplus supplies from the marketplace. We'll see, but I wouldn't bet on it (way too risky).
ReplyDeleteJeff Suehring
IMHO it seems to me that when no one questioned how it was possible to increase the cold storage inventories of cheese by almost 80 million pounds when there was only 5 million more pounds of milk,it has opened the door for the even greater suppression of the price of milk price. Not only has the cheese price dropped on the CME but now they are talking about the price of milk will only hit $15/cwt by December.
ReplyDeleteThe USDA needs to question the figures they are being given by the processors!
Steve Barton