“Crop Wars” may be coming to acreage near you. Many crop marketing analysts are portraying the 2011 planting season as “acreage wars,” with high commodity prices pitting corn, soybeans, wheat and cotton against each other for valuable space.

Two of the more highly anticipated USDA reports were released on March 31, with the latest Grain Stocks report estimating current grain inventories; and a Planting Intentions report providing a glimpse of what farmers intend to plant this spring.

Indications are that corn is the early leader in the battle for acreage, Dairy Profit Weekly Editor Dave Natzke reported. USDA forecasts growers intend to plant more than 92 million acres of corn in 2011, up 5 percent from last year and 7 percent more than 2009. If realized, it would be the second largest area planted to corn since 1944, behind only 2007’s 93.5 million acres, Natzke said.
Soybean planted area for 2011 is estimated at 76.6 million acres. While down 1 percent from last year, it would still be the third largest on record.
Looking at grain stocks, corn stored in all positions on March 1 was estimated at 6.5 billion bushels, down 15 percent from a year ago; while soybeans inventories totaled 1.25 billion bushels, down 2 percent.

Estimated corn acreage came in somewhat higher than many market analysts had predicted, but corn inventories came in slightly lower. Soybean acreage and stocks estimates came in slightly lower than many forecasts. There will probably be some futures price reaction as the week closes.

Natzke reported that Dean Foods has agreed to sell a milk processing plant in Waukesha, Wis., to settle a federal antitrust lawsuit filed in the U.S. District Court. Under the settlement, Dean has 90 days to sell the plant, which it purchased from Foremost Farms dairy cooperative in 2009. The lawsuit, filed by the U.S. Department of Justice and Attorneys General in Wisconsin, Illinois and Michigan, alleged Dean’s ownership of the plant presented antitrust concerns.

Total cheese use surges

The CME’s Daily Dairy Report (DDR) said total cheese use surged in the November to January period, up 5.8 percent from a year ago and the largest increase since summer 2005. Sales were strong for American and other cheeses and butter disappearance was up 16.6 percent, while fluid sales were flat.
The DDR reported dairy farm profitability improved in March. The March Milk-Feed Price Ratio is 2.18, up from February’s 2.02 estimate, according to USDA’s latest Ag Prices report and is unchanged from March 2010.
The All Milk Price was estimated at $20.40 per cwt., up $1.30 from last month’s estimate, and $5.60 above a year ago.

Corn averaged $5.46 per bushel, down 18 cents from February, but $1.91 above a year ago. The soybean price, at $12.10 per bushel, was down 60 cents from February, but $2.71 above a year ago. Alfalfa baled hay at $136.00 per ton, was up $9.00 from February, and $23.00 above a year ago. The DDR adds that, based on preliminary feed costs, there will not be an MILC payment for March.

The CWT program announced acceptance of three requests for export assistance from Darigold, Foremost Farms and United Dairymen of Arizona to sell 518,000 pounds of cheese to customers in Asia and the Middle East. The product will be delivered now through June and put CWT’s 2011 cheese exports so far to 19.6 million pounds to 16 countries.

Farm milk prices jump

Farm milk prices will jump again. The USDA announced the March Federal order Class III benchmark price Friday at $19.40 per cwt., up $2.40 from February, $6.62 above March 2010, and equates to about $1.67 per gallon. This is the highest Class III price since June 2008 however it appears to be the peak for 2011. Class III futures settled Friday as follows; April $16.65, May $16.58, June $16.70, July $17.32, August $17.70 and September at $17.72. The 2011 Class III average stands at $16.61, up from $13.85 at this time a year ago and $10.18 in 2009.

The March Class IV price is $19.41, up $1.01 from February and $6.49 above a year ago. The four-week NASS-surveyed cheese price averaged $1.9722 per pound, up 22.7 cents from February. Butter averaged $2.0591, down almost a penny. Nonfat dry milk averaged $1.4945, up 1.2 cents, and dry whey averaged 45.78 cents, up 3.4 cents.

Meanwhile; California’s 4b cheese milk price is $16.76, down 16 cents from February, $5.63 above a year ago, but $2.64 below the comparable Federal order Class III price. The 4a butter powder price is $19.06, up $1.18 from February, and $6.22 above a year ago.

Market analyst Alan Levitt said California uses the CME block price instead of the NASS-surveyed prices.

Blocks crashed in mid-month, thus the drop in the March 4b price. That won’t show up in the Federal order Class III price until April. Also, rising whey prices have no bearing on the California 4b price so there will be a growing disparity there. Class III gets a nice boost from whey, California’s 4b does not.

Cash cheese reversed gears on March 28 in a surprise 7.25-cent turnaround on the blocks and a penny and a quarter-cent gain on the barrels and followed the previous Friday’s quarter-cent increase on the blocks. Butter inched a half-cent higher, to $2.08, but then came Tuesday and prices retreated.

The blocks closed April 1 at $1.5950, down 3.25 cents on the week, but 16.5 cents above a year ago. Barrel closed at $1.5725, down 6.75 cents on the week, and 19.75 cents above a year ago. Thirty nine cars of block traded hands on the week and three of barrel. The NASS-surveyed U.S. average block price came in at $1.9192, down 8.4 cents. Barrel averaged $1.9078, down 8 cents. Softening international prices may be playing a role in weakening U.S. product prices.

Butter finished the week at $1.99, down 8.5 cents but still 49.5 cents above a year ago. Seventeen cars were sold. NASS butter averaged $2.0659, down a nickel.

Cash Grade A nonfat dry milk closed Friday at $1.70, down a nickel, while Extra Grade held all week at $1.80. NASS powder averaged $1.5183, up 0.4 cent, and dry whey averaged 45.84 cents, up a penny and a half.

Decline in cold storage

Dr. Robert Cropp, emeritus professor at the University of Wisconsin at Madison said last week’s gain in cheese was because Cold Storage data showed a slight decline in cheese stocks from January to February, which he added is good news. However, stocks were still 4 percent above a year ago.

Indications are that cheese demand is holding pretty good, according to Cropp, however cheese production is running strong but buyers may be looking down the road. The last Milk Production report showed U.S. milk output was only up 2 percent and February cow numbers did not increase from January.
He warned however that it was questionable whether it would hold and said he expected it to slip as we enter the spring flush but then start to rebound in the summer months and fall.

Cropp said the markets took a little nosedive immediately after the earthquake in Japan, but it appears as if exports will recover. There is growing concern about milk quality in Japan, which is also a major cheese buyer.

China has also been active in the international dairy market, he said, but China’s interest is more on powdered milk and dry whey than on cheese.