The Milk Producer - November 2008 - (Page 44)

Nov MarketsEng:New Template 10/24/2008 11:48 AM Page 1 MARKETS Blend price increase projected C urrent numbers are suggesting P5 dairy producers could be looking at a blend price increase around $1.35 per hectolitre on Feb. 1, 2009. That could stem entirely from higher fluid milk returns, according to a forecast prepared by Dairy Farmers of Ontario (DFO) senior policy adviser Phil Cairns. P5 producers received an increase effective Sept. 1 that raised the blend price 1.8 per cent, or about $1.40 per hectolitre. That was based on a two per cent increase for industrial milk granted by the Canadian Dairy Commission (CDC) and a P5 fluid increase by the same amount. Sharply increased prices for fuel, feed and fertilizer were cited as reasons for the increase. The P5 fluid milk price formula is based on a weighting of 30 per cent consumer price index, 40 per cent producer cash costs and 30 per cent personal disposable income. The formula is to be reviewed after the price adjustment next February. Recently published indices suggest a 6.15 per cent fluid milk increase for Feb. 1, 2009 over the level a year earlier, Cairns notes. However, it was agreed that the Sept. 1 increase would be deducted from any increase in February. He calculates the resulting fluid increase would raise the overall blend price by $1.35 per hL. “The increase could be slightly higher than this depending on what happens to producer cash costs and the consumer price index over the next two months,” he says. Little change seen for industrial milk Prices for oil and other commodities have eased, resulting in current expectations feed, energy and, to a lesser extent, fertilizer prices will stabilize at second-quarter levels for the balance of 2008 and into 2009. P5 and Western Milk Pool blend prices* The graph below shows the 12-month blend price for the P5 provinces and the Western Milk Pool (WMP). *There is a two month lag reporting these figures. Solids non-fat to butterfat (SNF-BF) ratio This graph shows Ontario’s SNF-BF ratio for the last 12 months in relation to Ontario’s target SNF-BF ratio of 2.2840. 2.45 74 72 70 68 66 64 P5 $70.39 WMP $71.03 2.4 SNF-BF Ratio 2.35 2.3 2.25 2.2 2.15 2.3014 Blend price in $/hL Sept 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 June 2008 July 2008 Aug 2008 P5 blend price WMP blend price Ontario’s SNF-BF ratio 44 | November 2008 | MilkPRODUCER Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 June 2008 July 2008 Aug 2008 Sept 2008 Target SNF-BF ratio

Table of Contents for the Digital Edition of The Milk Producer - November 2008

The Milk Producer - November 2008
Contents
Editor's Notes
DFO�Chair's Message
Dairy Update
DFC Promotion
Farm Finance
Forage Fallout
Issues Update
Research
Applied Science
Markets
New 'N' Noted
Back Forty

The Milk Producer - November 2008