June 18, 2013 — FC Stone dairy economist Bill Brooks recaps the World Agricultural Supply and Demand Estimates report that was released last week.
Archive for the ‘Bill Brooks’ Category
May 21, 2013 — Even with a good corn and soybean crop, it looks like we are still going to have some issues. FC Stone dairy economist Bill Brooks shares some insight on what he is looking at in the months ahead.
April 2, 2013 — FC Stone dairy economist Bill Brooks shares with DairyLine listeners the latest market report.
March 5, 2013 — FC Stone dairy economist Bill Brooks joined us on DairyLine Tuesday to talk about the markets and the validity of the Milk-Feed Price Ratio.
February 5, 2013 — Where are cheese prices headed? FC Stone dairy economist Bill Brooks joined us on Tuesday’s DairyLine Radio program to discuss:
(June 5, 2012) CME block cheese opened the week offered down 5 3/4-cents to $1.5925. FC Stone dairy economist Bill Brooks said he wasn’t too surprised by the decline, saying the $1.65 block price killed off demand and brought a load that somebody was trying to move.
The decline means a fair amount of last week’s gains were lost and the gap between blocks and barrels were narrowed to six cents. The run-up to end May didn’t see much in the way of trading.
How low will the cheese price go? Brooks said some of the larger city schools are getting out in parts of the country so more milk is becoming available for manufacturing, even as production will be declining seasonally.
“Components will be declining seasonally but more of that is available to go into storable commodities and more than likely some of that will end up in cheese production,” putting more pressure on the supply side the next few weeks.
“I don’t really anticipate approaching the lows on cheese prices when we were down to a $1.46 in early March, but I do anticipate we might see some further weaknesses as we go forward over the next week or two.”
(April 3, 2012) Recapping CME spot market activity for Tuesday, April 3, 2012, block cheese was unchanged at $1.49 with no activity. The barrels were up ¼-cent to $1.4625 on one bid. CME spot butter was unchanged at $1.4550 on one bid and two offers.
FC Stone dairy economist Bill Brooks told DairyLine the weakness in the cash dairy markets hasn’t been as bad as anticipated. “Even though we have good demand, the supply-side is still overwhelming the marketplace,” he said. The mild weather lately helped increase the level of milk production.
“At this time last year we were looking at prices declining, granted we had been up both over two dollars in cheese and butter by this time last year but the beginning of April we were on a downward slide in our pricing so it’s not unusual to see some price weakness here as we move into April,” he reported.
We have pretty much all of the delivery for the upcoming Easter holiday and the weather looks like it might return to closer to normal temperatures. “So that might pull a little bit of demand away on the ice cream part of it but that’s negatively impacting butterfat demand and sending some more of it up into the churn,” Brooks said. Adding we are probably going to be in this situation for the next month or two as we work our way through it.
Does that mean declining cheese prices? Brooks sees prices holding in the $1.40’s. “I still believe there could be some potential for us to have some price weaknesses because we still do have a lot of milk to work our way through as far as spring flush goes,” he said.
There is some potential that we could see some additional weakness and prices getting pushed down into the low $1.40’s, but at the moment sellers are not being real aggressive and even buyers are waiting to purchase cheese.
“The inventories are not burdensome enough yet for sellers to get really excited and are not under any pressure to move product,” he said. Last week we had the milk feed ratio come out of the Ag prices report and showed a pretty low ratio of income over feed cost so there is concern about profitability for dairy producers as we work our way down the road.
“I’m pretty sure in the back of a lot of buyers minds that they remember the last time we were down in the price area here and it took a few months,” Brooks said. We did see milk production slow down for a month or two during that time and that had some positive impact in 2010 that carried into 2011.
(December 6, 2011) The butter stampede has slowed down a bit this week after the CME market recorded 56 loads trading hands last week.
“The barn door was left open and there’s stampede of butter out the door,” FC Stone dairy economist Bill Brooks quipped on DairyLine Radio.
We haven’t seen this type of volume trading in butter in five years. You have to go back to August of 2006 where there was a bigger trading week. Trading started off strong this week with 12 sales on Monday, but slowed down Tuesday and Wednesday with four and two trades respectively.
“All of a sudden there’s a lot of butter out there, and it’s available,” Brooks said. “We’ve been seeing the production numbers for butter being very strong.”
He said a fair amount of exports and decent domestic demand help use up most of the production over the last few months, but the market finally caught up with that. The shifting international market has moved down to the southern hemisphere for its supplies and we appear to be through the big holiday push for butter, so there’s a lot of that is excess out there.
“The best I can see going back and looking at USDA’s information on butter production, the October volume this year is the most we had ever produced in any year since they started keeping statistics,” Brooks said. “Our Cold Storage numbers have shown a couple months of double digit gains and so it’s finally got to the point where there is a lot of butter out there and people are trying to move it.
That said, the spot price for butter hasn’t dropped; in fact it was up Monday and Tuesday at $1.64 per pound.
“With that type of volume you would anticipate prices getting hammered, but we’re holding in there,” he said. “If we do break through that $1.60 level, that could be the straw that breaks the camels back as far as where butter prices could be going.” The last time the butter price was below $1.60 was about this time last year.
Meanwhile, cheese prices continue to slip, with blocks closing at $1.6850 Wednesday and barrel cheese dropping to $1.60. It’s hard to imagine, but we started off the year in the $1.30’s, and then we spent a good amount of time above $2.00.
“I would imagine we have good support for cheese in the low $1.60’s and then the next level would be in the $1.50’s and that’s the same with butter as well,” Brooks stated.
More milk being produced not only in this country but across the southern hemisphere is filling up a lot of cheese vats and butter churns. Brooks expects prices will be pushed down to move the product.
(October 25, 2011) FC Stone dairy economist Bill Brooks talked about the recent release of USDA’s Cold Storage report, the flurry of trading activity in the cheese market, and the what’s going on in the spot butter market.
The butter market absorbed 18 cents in declines the last two weeks, but has remained steady the past few days, ending the week at $1.9025.
Fall is in the air in many parts of the country and retailers are thinking about what they are going to be doing for Thanksgiving promotions.
“But with price declines we have seen the past couple weeks and potentially more coming, they are probably holding off and waiting a few more weeks until they really have to finalize any of their plans and lock in prices for those type of features,” Bill Brooks, FC Stone dairy economist said.
Since May and until recently the butter price was over $2.00. Retailers may have passed on butter as being an item they wanted to feature, but now the declines below $2.00, puts butter in a position to be more prominent as we go into the Thanksgiving and Christmas holidays.
“Hopefully that will move more product and give us a higher base at the end of the year,” Brooks commented.
We also saw some declines in the cheese market, now moving sideways in the $1.70’s according to Brooks.
‘Blocks having spent so much time there at $1.79 allowed some stability to the market and allowed barrels to work through some excess supplies and rebound a little bit,” Brooks said.
Blocks were down a half-cent Friday to $1.7775, while the barrels held at $1.72.
“I think people are still a little bit nervous about where cheese could potentially go,” Brooks said. “Buyers are looking at maybe some potential downside risk, while sellers are anticipating seeing the price go higher, and as a result we are holding steady and tracking sideways.”