Latest Commercial Disappearance Report Raising Eyebrows

November 29. 2013 — The Agriculture Department’s latest report of  dairy product commercial disappearance is raising USDAsome eyebrows. Ditto on its  latest milk cost of production data so we have elected not to report it. USDA  Economic Research Service economist William McBride, told DairyBusiness Update editor Dave Natzke  that they will update the data and issue revised October estimates next  month.

Third Quarter commercial  dairy product disappearance was very strong, according to data compiled by Jerry  Dryer, editor of the Dairy and Food  Market Analyst. Speaking in Friday’s DairyLine Radio broadcast, Dryer said  USDA’s data was confused at best but his findings are “supportive of current  milk prices.”

American cheese was up more  than 5 percent, he said, other cheese was up almost 4 percent, and butter was up  about 8 percent. The nonfat dry milk and skim milk powder wide of the business  was up 14 percent, which he attributes to exports, prompting the question, what  will exports look like next year?

Dryer also views the October Milk Production report as bullish  with output only being up around 1 percent. Compare that with commercial  disappearance for all milk and dairy products being up 3 1/2 percent in the  Third Quarter, he said “We’re burning through product faster than we’re  producing it.”

He adds that the October Cold Storage report “confirmed that in  spades for us.” There were big pull downs, not just in October, according to  Dryer, but, looking at June to October and, when we get November data, he  believes we will see a huge pull downs June through November, late summer and  all of fall which is “very supportive of milk prices,” he  concluded.

Lee Mielke, Mielke Market Weekly DairyBusiness Update Associate  Editor

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