February MILC payment the first in nearly two years
For the first time since April of 2010, a federal Milk Income Loss Contract (MILC) has been authorized.
It applies to milk shipped in February of this year. The payment rate will be slightly over 38.95 cents per hundred to dairy farmers who had chosen the month to begin to receive an MILC payment for the 2012 fiscal year.
The MILC payment for February, which is the first being made since April of 2010, occurred thanks to the feed cost adjuster that is part of the current legislation for the program.
Dairy farmers are eligible to receive an MILC payment on up to 2.985 million pounds of milk production in a fiscal year.
According to University of Wisconsin-Madison dairy economist Brian Gould, who compiles a weekly forecast on the potential MILC rates from the latest Class III milk and feed futures prices, those payments are likely to be at least double the February payment for the next five months.
Based on the prices at the end of the business day on Friday, March 30, Gould calculated possible MILC payments of nearly 89 cents per hundred for both March and April, just over 99 cents for both May and June, and 78 cents for July.
Until the official announcement for February MILC payment was made a week ago, Gould's published estimate for the month was just under 35 cents per hundred.
Dairy farmers who have not yet chosen a starting month for MILC payments in the current federal fiscal year need to file the appropriate paperwork at their county Farm Service Agency office.
The deadlines are the 14th of the month - March 14 in order to chose April as the starting month, for example.
The Class III milk cash price for March is $15.72 per hundred. This is only 6 cents more than the Class I national base price of $15.66 per hundred for April, which means that the feed cost adjuster will again be used to determine the MILC payment rate for April.
In Wisconsin, the all-milk average price for March is estimated to be $17.90 per hundred, down by 40 cents from February. The national all-milk average price for March is $17.40 per hundred - 30 cents less than in February.
Among the top 10 milk production states, the highest all-milk prices for March are $18.70 per hundred in Pennsylvania, $18.40 in Minnesota, and $18.10 in New York. The lowest prices for the month are $16 per hundred in California, $16.20 in New Mexico, and $16.70 in Idaho.
Nothing has occurred in the spot markets for dairy commodities on the Chicago Mercantile Exchange within the past week to suggest much of a change in the currently estimated MILC payments for nearby months.
Only a few trades for Cheddar cheese were made during the daily market sessions and the only price movement for the week through Wednesday of this week was a .25-cent gain per pound for Cheddar barrels.
At the end of Wednesday's session, Cheddar blocks remained at $1.49 per pound and barrels were at $1.4625. The day's only activity was an unfilled bid to buy one carload of barrels.
The AA butter spot market price, however, continued to slide - down by 6.75 cents per pound at the close of Wednesday's session compared to a week earlier.
This included a 1.75-cent drop on Wednesday as a result of an uncovered offer to sell one carload, putting the day's closing price at $1.4375 per pound.
Class III milk futures posted modest losses for nearby months on Wednesday. This left the day's closing prices at $15.73 per hundred for April, $15.48 for May, $15.57 for June, $16.19 for July, the upper half of the $16s for the remaining months of 2012, and the low $16s per hundred for all months of 2013.
The futures prices for dry whey, a component of Class III milk pricing, showed weakness on Wednesday of this week. They posted small losses for every month from April through July of 2012.
As a result, prices stood at 57.95 cents per pound for April and 52 cents for May before dropping into the 40s for all remaining months of 2012 and into the 30s for all months of 2013 into early 2014.
Cooperative Working Together has announced the acceptance of a total of five bids from Dairy Farmers of America, Darigold Cooperative, Foremost Farms, and the Maryland and Virginia Milk Producers Cooperative.
Those bids were for bonus payments on the export of 818,000 pounds of Cheddar and Monterey Jack cheese and 1.102 million pounds of butter to countries in Asia and the Middle East from April to July.