hilmar plant milk intake 2011 -2015 with year-aver-year ... 99 - figures of james de...2010 - 2015...
TRANSCRIPT
Figure 1: HCC's Hilmar plant has had no trouble increasing milk purchases'
Hilmar plant milk intake 2011 - 2015 w ith year-aver-year percent growth
+1.4% +2 .3% +3. 7%
+4,8%
+4.4% +1.3%
2011 2012 2013 2014 2014 YTD 2015 YTD
Calend ar year (YTD ; Jan - Aug)
Source: HCC, 2015.
·Volume amount confidential, axis not scaled (starts at 0 pounds)
Figure 2: California producer consolidation is not unique in the US
Change in number of licensed dairies
2010 2014 % change
TEXAS 590 440 -25%
MINNESOTA 4,540 3,605 -21%
WISCONSIN 12,710 10,290 -19%
US TOTAL 53,132 45,344 -15%
CALIFORNIA 1,715 1,485 -13%
MICHIGAN 2,230 1,950 -13%
IDAHO 585 530 -9%
NEW YORK 5,380 4,950 -8%
NEW MEXICO 140 130 -7%
PENNSYLVANIA 7,340 7,370 0%
WASHINGTON 460 480 4%
Source: USDA/NASS, 2015
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Figure 3: Producer consolidation is not unique arou nd the w orld (CA = Canada)
Table 1. Near-identical decline in U.S. and Canada
Number of Dairy Farms
U.S. EU-15 CA NZ
'92 170,500 1,0 18,077 3 1,200 14,458
'00 105,055 690,140 1 9,411 14,025
'09 65,000 397,435 1 3,2 1 4 11,63 8
'92-'09 -62% -61% -58% -20%
Source: IDFA
Figure 4: Cost of production varies between California producers. Total cost of production for conventional farms in CDFA's Cost of Production Feedback, Q4 2014*
28.00
26.00 • 24.00 • 22.00
~ 20.00 • ~ ... •• • Q. 18.00 .. ... '" • •• .. •• 16.00 • • 14.00
• • • • • • .. • ... . • .. • • .. •• • • • • • • •• • • • .. • • • • 12.00
10.00
•
i ..
•
1357 9 1113151719212325272931333537394143454749515355575961636567
Producer #
Simple average total cost • Actual producer total cost
Sou rce: CDFA, HCC analysis, 2015 ' Organic and producers wit h higher than 3.9% butter rat excluded, and only north and south valley included.
2
Figure 5: The California NASS All Milk price basis range compared to Class III is comparable to other
major dairy states. 2010 - 2015 H1
$3.00
$2.50
$2.00
~ ~ $1.50 a.
V>
51.00
$0.50
$ MN WI
Source: NASS, AMS/USOA, 2015
10 CA TX MI NM WA NY PA
·Calculated by t aking the spread between the minimum an d maximum range between the NASS All Milk price for
each state compa red to Class II I for each year 2010 to 2015 HI, then taking those max spreads for each year and
averaging them. For example, if in the year 2010 the state's All Milk Price had a minimum of -$0.25 per cwt spread
to Class III in one month and a maximum price spread of $1.00 per cwt to Class III in another month, for the year
the max range in the spread would be $1.25 per cwl. Th is is done for every year and averaged, with one half
weighting for 2015 because it is a half year.
3
Figure 6: Average price spread versus Class III shows California ranks 1".2010 - 2015 H1
$3.50
$3.00
$2.50
$2.00
~ u
$1.50 ~ 0. v;
$100
$0.50
I I S -CA NM ID WA WI MI MN TX NY PA
$(0.50)
Source; NASS, AMSjUSDA, 2015 'calculated by taking the spread between the All Milk Price between Class III for each month from 2010 to 2015 HI, then averaging this spread.
Figure 7: California mailbox prices correlation to Class III similar to other major dairy regions: R
squared coefficient Jan 2010 to May 2015
0.98
0.96
co 0.94
'" 'w "' -.; 0.92 0 u
-a i" co 0.90
" 0"
'" '" 0.88
0.86
0.84 Minne<;otd WisconSin Northwest Western New
mailbox mailbox mailbox TX mailbox Mexico mailbox
Source; AMS/USDA, 2015
4
CJlifortlla Western Mailbox Penn
mailbox
I New York Michigan mailbo~ mailbox
,
Figure 8: The California NASS All Milk price basis range compared to a Class III & IV 50/50 split
compares favorably to other major dairy states. 2010 - 2015 H1
$2.50
$2.00
$1.50 ~ u i; 0.
'" $1.00
$0.50
$ CA ID WA MI TX NM NY PA MN WI
Source: NASS, AMS/USDA, 2015
'Calculated by taking the spread between the minimum and maximum range between the NASS All Milk price for
each state compared to a Class III & IV 50/50 split for each year 2010 to 2015 H1, then taking those max spreads
for each year and averaging them. For example, if in the year 2010 the state's All Milk Price had a minimum of
$0.25 per cwt spread to a Class III & IV 50/50 split in one month and a maximum price spread of $1.00 per cwl to a
Class III & IV 50/50 split in another month, for the year the max range in the spread would be $1.25 per cwt. This is
done for every year and averaged, with one half weighting for 2015 because it is a half year.
5
Q.l"cljSl: t;;ol)O Sr l •t
Figure 9: Average price spread versus Class III shows California ra nks 1". 2010 - 2015 Hl 1\
$4.00
$3.50
$3.00
$2.50
3 u
$2.00 ~
'" Q. $1.50 v;
$100
$0.50 I I $ CA NM ID WA WI MI MN TX NY PA
$(0.50)
Sou rce: NA5S, AMS/USDA, 2015 'calculated by taking the spread between the All Milk price between Class I ~fo r each month from 2010 to 2015 Hl , then averaging this spread.
Figure 10: Mailbox prices correlation to a Class III & IV 50/50 split shows California risk management
can be effective by adding a butter/powder element. Not surprisingly, Wisconsin shows a weaker
correlation using Class IV, m eaning Class III only is more appropriate. R-squared coefficient Jan 2010
to May 2015 (higher is better)
c
'" ·u '" <; 0 u
" 1-ro ~ 0-
'" 0<
0.98
0.96
0.94
0.92
0.90
0.88
0.86
0.84
California Northwest M!chigan
mailbox maibox nlditbox
Source: AMS/USDA, 2015
Western Western TX New York
Penn mcJilbox miJilbox mailbox
6
New
Mexico rnailbol(
Wi:;consln Minnesota
mailbox mailbox
,
Figure 11: Open interest in butter and NFDM futures has expanded rapidly in recent years, offering
producers more effective risk management options. Open interest per day.
8.000
7,000
>- 6,000
'" "tJ
iu 5,000 "-~ ~
i" 4,000 ., C c 3,000 ., "-0
2,000
1,000
1/4/2010 1/4/2011 1/4/2012 1/4/2013 1/4/2014 1/4/2015
Butter open interest - NFDM open interest
Source: Understand ing Dairy Markets, 20 15
Figure 12: Open interest in cheddar cheese futures has also expanded rapidly, thereby increasing
California producer's risk management effectiveness. Open interest per day.
45,000
40,000
35,000 >-
'" "tJ 30,000 iu "-~ 25,000 ~ ., ~ 20,000 c c
15,000 ., "-0
10,000
5,000
-1/4/2010 1/4/2011 1/4/2012 1/4/2013 1/4/2014 1/4/2015
- Cheese open Interest
Source: Understanding Dairy Markets, 2015
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?t>. i c;l Figure 13: Producers in FMMOs are beinl}fnder Class III: NASS State All Milk Prices versus Federal
Order blend prices show negative premiums
$1.50
$1.00
$0.50
$-~
" $(050) u ~ v\ ~ , r , (lJ
$(100) V ~, "-
V>
$(1.50) 'I. •
5(2.00) \ 5(2.50)
5(3.00)
'" '" '" cr a a a a ~ ~ .... ~, N N N M co .,., M <r <r .,. <r "' "' "' a 9 9 9 .... '":' .... .... ~ ~ ~ .... '":' .... ~ '":' '":' ~ .... .... '":' .... .... .... .... Co 5. ~ u Co 1i "3 c Ci "3 U c '- "3 U c ii c Ci "3 c ~ "5 ~ ~
u ~ '"
a. ~ -" u
~ u
~ J « 0 <Z 0 « 0 « 0 « 0 « 0
Michigan - - TeXdS New Mexico
Source: NASS, FMMO MA websites, HCC analysis, 2015 Note: calculated by: (NASS Al l Milk price - (Class III at test + PPD)). Milk test data for TX and NM was state specific,
MI used Order 33 test data, PPD prices forTX & NM used the Dallas IDeation, MI used the Cuyahoga, OH IDeation.
Figure 14: NDPSR cheese, which drives milk costs, is often out of line with key international
benchmarks, making being a consistent US supplier difficult
$2.&0
52.40
$2.20
$2.00 .0
:u $180 a.
V> $1.60
$1.40
5120
51.00 N ~, N N N N M M M M M M " " <r <r " " "' "' "' ~ .... .... '":' .... .... '":' M .... .... ~ .... M M '":' .... M M .... ~
Co " >- ~ a. > c :0 >- -" a. :> Co ~ >- ~ a. :> i: ~ >-
l'; '" (lJ 0 ro ro (lJ 0 l'; '" ro (lJ '" ~ ro co :;: :;: V> Z :;: :;: V> Z :;: :;: V'> Z :;: :;:
- US NDPSR Cheddar Oceania cheddar - German gouda
Source: USDAjAMS, ClAL.it, 2015
8
"' "' .... .... ~ a.
" V>
Figure 15: NDP5R NFDM, which drives milk costs, can be out of line with international SMP, making
being a consistent US supplier difficult
52.50
52.30
52.10
51.90
.ri 51.70
:;:; 51.50 0.
V} $1.30
$1.l0
50.90
50.70
$0.50 N N N N N N co co co co co M .,- .,- .,- .,- .,- .,- en c" en en en ~ ~ ~ ~ M M M M M M M M M M M M ~ ~ ~ M M ~ M
C :. >- 3 6. > c ~ >- ~ 6. > C >- 3 0. > C ~ >- 3 6. -'" m '" 0 ~ '" '" '" 0 ~ '" <0 '" 0 ~
<0 <0 '" :;; :;; V> Z :;; :;; V> Z :;; :;; V> Z :;; :;; V>
NDPsR NFDM - GDT sMP average
Source: UsDA/AMs, Global Dairy Trade, 2015
Figure 16: NDPSR dry whey (adjusted from 12% to 34% protein) does not correlate well to WPC prices
52.00
51.50
~ 51.00
~
'" 0. V} 50.50
$ -...,. 5(0.50)
0 0 0 0 M M M N N N N co co co co " .,- .,- :'! "' "' "' M M " .... ~
" .... .... .... .... M .... .... .... .... .... .... :1 ~ " :1 c 0. t; c 0. ~ c :i ~ c ~ 3 ~ C 0. t; C 0. -'"
~
~ ~ u ~
~ u
-'" "- u ~
~
~ ~
« ~ 0 « 0 « ~ 0 « 0 « ~ 0 « ~
Dry whey (protein adjusted) premium over WPC-34 NDPSR dry whey (adjusted to 34% protein)
- DMN WP('34 Mostly
Source: UsDA/AMs (NDPsR for dry whey, DMN mostly for WPC-34J. 2015
9
Figure 17: NDPSR dry whey (not protein adjusted) does not correlate well to lactose prices
$1.00
50.80
$0.60
50.40
,e ~ a. 50.20
'" $
5(0.20)
5(0040)
5(0.60) 0 0 0 0: M M M ~ N N N C, M M M M ..,
" .,. .., "' '" '" M '7 ~ M M M ~ ~ ~ ~ ... M ~ ~ M M ~ M ~ ~ M M
C ii .2 U c 5. "S u c 5. "S U c 5. "S u c Q ~ U C: 5. "S ~
<! 0 ~ '" 0 ~ '" 0 ~ '" 0 ~ '" 0 ~ '" Dry \vhey premIum over l,lCtO')(' ·Nf)PSR dry whey - DMN Li'lctosC' Mostly
Source: USDA/ AMS (NDPSR for dry whey & DMN for lactose), 2015
10