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Wisconsin Ag News Headlines
Cash Cheese Price Crash After Release of World Demand Report
Wisconsin Ag Connection - 12/12/2008

Cash cheese prices fell hard on the Chicago Mercantile Exchange on Thursday, with blocks closing at $1.57, down 18 cents (the lowest level since April 2007) and barrels down 22.5 cents at $1.52 per pound. CME Butter prices are also at their lowest level since June 2003 at $1.13 per pound.

One of the many factors for the large sell-off may have been the USDA's latest World Agricultural Supply and Demand Estimates report released Thursday. The agency lowered its 2008 and 2009 milk production forecasts slightly from last month's numbers. The latest figures show that 2008 output will come in at 189.7 billion pounds, down 100 million from last month's estimate, and 2009 output will hit 191.4 billion, also down 100 million from a month ago. Cow number forecasts were unchanged from a month ago but output per cow for both years was reduced reflecting the continued slow rate of growth in output per cow.

Commercial export forecasts for 2008 were raised as export data points towards stronger-than-expected sales, especially on a fat basis. However, 2009 forecasts were unchanged as weaker international demand is expected to limit exports.

Class III and IV milk prices for 2008 and 2009 were reduced from last month as most product price forecasts were lowered. Demand both domestically and internationally will likely be affected by economic weakness, the report said. The 2008 Class III milk price was projected to average $17.40-$17.50 per cwt., up a dime on both ends from last month's estimate. The 2009 Class III average was predicted to range $14.50-$15.30, down from the $14.75-$15.65 estimated a month ago.

Look for a 2008 Class IV average of $14.55-$14.75, down 20 cents on both ends from the November estimate. The 2009 average was predicted at $10.75-$11.65, down from the $11.50-$12.50 estimated a month ago.


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