(click on image to enlarge)
The trade data came out today and surprise, surprise exports of NFDM and skim milk powder were up about 25% in August 2010 when compared with August 2009.
A look at the above graph tells anyone why. The California Weighted Average Price (CWAP)is in the basement. Most of the powder produced in this country comes from California and as a result NASS prices are below where they should be.
The argument could be made, although probably with no proof offered, that the members of the co-ops involved in exporting somehow benefit. However, those low California milk powder prices drive down the Class IV price for the entire country. At the moment Class IV is the Class I mover and so California prices are driving down Class I prices throughout the entire country.
By the way, MPC imports were up in August 2010 about 20%, when compared with August 2009. More cheap cheese and more cheap farm milk.
I tried to point out that imports are creating many of our pricing problems at a farm meeting tonight and nobody wanted to listen. All they are interested in is supply management. bah
ReplyDeleteJohn the other major factor today in this export boom again is the U.S. dollar is dropping big time as they ramp up the printing presses. Are we looking at 1970 inflation finally with Obamanomics. Spend! spend! spend!
ReplyDeleteNFDM has been in the $1.20s or better in the world market for quite some time now so why was or is it neccesary to future contract at 15 to 20 cents less every week unless the intention is to lower the milk price?
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