Dry Product Prices

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Today's NASS price for nonfat dry milk (NFDM) is $1.3938 per pound - pitiful. Today's CME price for NFDM is $1.8325 (Grade A). The most recent, February 15, 2011, GlobalDairy Trade internet auction price for skim milk powder which is virtually interchangeable with NFDM was $1.78 per pound. Is there an explanation which relates to "market" economics. Probably not.

The good news is that all prices are heading upwardly, even whey.

NFDM Prices

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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.

Powder Predictions

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In the above Rich Lewis predicts NFDM prices by the end of the year close to ONE DOLLAR.

Fonterra, on the other hand just had their mid-month auction which averaged $1.465 per pound.

Something is wrong.