Eventful Dairy Market Week

Published on: 09:44AM Aug 01, 2008
The chart of the week is monthly milk cow slaughter. June milk cow slaughter was slightly larger than a year ago but was basically even with the June prior 5 year average. Now one may think when they see this chart that the data is relatively uneventful. But uneventful data can be as newsworthy as sharp volatile swings sometimes. How so? Well the trade has been anticipating a reduction in the milk cow herd for some time now leading to slower milk production growth and tighter milk supplies. However to reduce the milk cow herd farmers will need to ramp up dairy cow slaughter. And as the chart depicts below that didn’t happen in June. Weekly milk cow slaughter data suggests it didn’t happen in July either. Why? Well despite record feed costs most dairy farmers have likely been fairly profitable encouraging them to hold on to their dairy cows longer. So any sustained reduction in the US milk cow herd may occur later and be slower than what was built into the class III milk and cheese markets just a few short weeks ago. The CME spot cheese and class III milk futures contracts moved sharply lower this week. If you would like to some help taking advantage of the downturn in the cheese and class III markets please feel free to give me a call.  
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