(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.
