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Dairy Outlook 2013. Marin Bozic Midwest Dairy Expo St Cloud, MN November 27, 2012. Dairy Food Marketing Economics. Funded by dairy check-off Located at the University of Minnesota, but covering 10-state area Research: Risk Management Price Analysis Consumer Insights - PowerPoint PPT Presentation
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Dairy Outlook 2013
Marin BozicMidwest Dairy Expo
St Cloud, MN November 27, 2012
Dairy Food Marketing Economics
• Funded by dairy check-off
• Located at the University of Minnesota, but covering 10-state area
• Research:• Risk Management• Price Analysis• Consumer Insights• Dairy Technology
Assessment
MMPA – supporting policy & education work
All-milk price: 2011-2012
Jan-1
1
Mar-11
May-11
Jul-1
1
Sep-11
Nov-11
Jan-1
2
Mar-12
May-12
Jul-1
2
Sep-12
$15.00
$16.00
$17.00
$18.00
$19.00
$20.00
$21.00
$22.00
$23.00
Milk Production: 2012 vs. 2011
Source: Daily Dairy Report
Year-to-Year Changes in U.S. Milk Production
Jan-08
Apr-08Jul-0
8Oct-
08Jan-09
Apr-09Jul-0
9Oct-
09Jan-10
Apr-10Jul-1
0Oct-
10Jan-11
Apr-11Jul-1
1Oct-
11Jan-12
Apr-12Jul-1
2-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
Year-to-Year Changes in Milk Per Cow
Jan-08
Apr-08Jul-0
8Oct-
08Jan-09
Apr-09Jul-0
9Oct-
09Jan-10
Apr-10Jul-1
0Oct-
10Jan-11
Apr-11Jul-1
1Oct-
11Jan-12
Apr-12Jul-1
2-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
Weather Outlook (Feb-Mar-Apr 2013)
Source: http://www.cpc.ncep.noaa.gov/products/predictions/90day/
Weather OutlookMay-Jun-Jul 2013
Difference in U.S. vs. InternationalCheese Prices
Corn: Small stocks = explosive price dynamics
Is Inflation a Problem?
Growth vs. Deleveraging
The Kiwi Cycle(Change in Per Cow Milk Yield)
19771979
19811983
19851987
19891991
19931995
19971999
20012003
20052007
2009-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
New Zeland USA
Source: http://www.cgd.ucar.edu/cas/catalog/climind/soi5.gif
Income over Feed Costs Margin: 2004-2012
Jan-04
Jul-04Jan
-05Jul-0
5Jan
-06Jul-0
6Jan
-07Jul-0
7Jan
-08Jul-0
8Jan
-09Jul-0
9Jan
-10Jul-1
0Jan
-11Jul-1
1Jan
-12Jul-1
2$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
Home-feed profile: Insuring 8-10th month
050
100150200250300350400
024681012141618
LGM Premium Paid Actual Margin
Margin with LGM Net Indemnity
$/Mg of Milk $/cwt of Milk
Policy outlook for 2013
1) ObamaCare
2) 2012/3 Farm Bill- MILC, DPPSP gone- Margin insurance, market
stabilization likely
3) Immigration reform
The Bottom Line
1) High feed costs will keep milk production in check. Exports may falter, providing additional domestic supply.
2) Some chance drought may stay with us.3) High volatility is the new normal, for several
years at least.4) Big policy changes coming up.
Chuck Norris doesn’t need to forecast… he knows prices!
Ignorance abhors uncertainty.
Beware of overconfident brokers, forecasters or policy insiders!
Dairy Outlook 2013presented at the Midwest Dairy Expo 2012
Dr. Marin [email protected] of Applied EconomicsUniversity of Minnesota-Twin Cities317c Ruttan Hall1994 Buford AvenueSt Paul, MN 55108
You may download this presentation at http://marinbozic.info/