The Milk Producer - June 2009 - (Page 44)

MARKETS P5 quota adjustments delayed? P roducer quotas in the P5 provinces have been over-issued for most of this dairy year to encourage production. The P5 quota policy harmonization calls for provinces to bring quotas in line with actual market requirements plus market innovation on Aug. 1. With production still recovering in all provinces and various incentive programs in place until Aug. 1, discussions are currently taking place at the pool level about possibly delaying the required date to Dec. 1. The delay would give provinces and the pool time to assess production and market trends going into the fall, and manage producer quota levels accordingly. In Ontario, producer quotas are projected to be over-issued by 1.5 per cent on Aug. 1. That would mean a 1.5 per cent quota reduction at the producer level unless the pool allows some timing flexibility. Supply improves modestly The P5 supply trend continues to show modest improvement with total supplies in March exceeding quota levels for the first time since production levels started to decline a year ago, says Phil Cairns, Dairy Farmers of Ontario senior policy adviser. P5 quota utilization for March was 101.14 per cent. While production is getting back to where it needs to be, P5 quota utilization for this dairy year, ending July 31, is now expected to come in at less than 98.5 per cent. Ontario utilization for the dairy year is cur- rently projected at 98.5 per cent and, at best, will not exceed 99 per cent, he says. Under the continuous quota system at the national level, under-production in this dairy year will be carried forward as production credits into the next dairy year. Existing supply trends suggest the P5 will not exhaust the under-production credits from this dairy year, plus available over-production credits under the national policy, until well into next spring. This assumes dairy product consumption continues to hold at current levels. Retail markets firm Cairns sees retail butter sales as a bell-weather for the overall market. Recent numbers suggest the market 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 $71.36 WMP $72.96 2.4 SNF-BF Ratio 2.35 2.3 2.25 2.2 2.15 2.2736 Blend price in $/hL Apr 2008 May 2008 June 2008 July 2008 Aug 2008 Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 P5 blend price WMP blend price Ontario’s SNF-BF ratio 44 | June 2009 | MilkPRODUCER May 2008 June 2008 July 2008 Aug 2008 Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 Target SNF-BF ratio

Table of Contents for the Digital Edition of The Milk Producer - June 2009

The Milk Producer - June 2009
Contents
Editor's Notes
DFO Chair's Message
Dairy Update
National Policy
Industry Roundup
DFC Promotion
Processor Spotlight
Empowering an Industry
Research
Applied Science
Rumi Nations
Markets
New 'N' Noted
Back Forty

The Milk Producer - June 2009