MARKETS Butter market pondered recommendation to suspend a possible market sharing quota (MSQ) increase Oct. 1 has not received unanimous support from all provinces. The recommendation was made in the face of high butter stock levels projected to increase by another five million kilograms by next July if action is not taken to curb production in the coming months. Based on a Valacta forecast, milk production in Eastern Canada is expected to strengthen in fall 2009 and spring 2010 as provinces use their accumulated under-production credits from the last dairy year. That could lead to potential excess butter inventories in spring 2010. “The Western provinces expressed concern that a quota reduction would not be a fair adjustment given the use of under-production credits in the east,” says Phil Cairns, Dairy Farmer of Ontario’s senior policy advisor. Over-supply needs attention The Canadian Milk Supply Management Committee (CMSMC) is to dis- cuss a possible 1.5 per cent reduction in MSQ at its October meeting. It is hoped this reduction would be enough to rebalance production with market and butter stock levels going forward. The Canadian Dairy Commission (CDC) provided an overview of the market situation. It notes butter stock levels as of July 31, 2008 and July 31, 2009 were 15.8 and 15.7 million kg respectively. Both were higher than needed to satisfy normal seasonal requirements. It also indicated high butter stock 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 76 74 72 70 68 66 P5 $72.03 WMP $74.06 2.4 SNF-BF Ratio 2.35 2.3 2.25 2.2 2.15 2.3313 Blend price in $/hL Aug 2008 Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 April 2009 May 2009 June 2009 July 2009 P5 blend price WMP blend price Ontario’s SNF-BF ratio 44 | October 2009 | MilkPRODUCER Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 June 2009 July 2009 Aug 2009 Target SNF-BF ratio
Table of Contents for the Digital Edition of The Milk Producer - October 2009