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Good crop year may mean $4 corn and moderate feed prices
DairyBusiness Update (DBU) reports that “Absent another drought, dairy producers can look forward to moderating feed prices, according to two ag finance specialists who spoke at National Milk’s National Dairy Producers Conference, April 9, in Indianapolis. Farm Credit’s Leland Strom is quoted as saying; “If we had a good crop year this year, I would not be surprised to see corn go sub-$4 per bushel.” 

Things are lining up to be a bin buster,” said Sam Miller, managing director of ag banking for BMO Harris, the eighth largest agricultural bank in the U.S. While he said corn could approach $4 per bushel, he adds the caveat: “You could have said the same thing a year ago at this time. There’s a long way to go between now and harvest.”

Chris Hurt, Purdue ag economist, told attendees the impact of the past three years of below-trend corn production, combined with federal renewable fuel policy, could finally come to an end. He projects a slowdown in corn demand from China and forecasts corn futures prices in the $4.50-$5.50 per bushel range for 2013-2016, with soybean meal averaging about $350 per ton over the same period. He adds that, “When corn and soybean prices moderate, crop acreage shifts to other crops, which also could help moderate alfalfa hay prices.”

Attendees were also told that “the benefits of adopting the Dairy Security Act (DSA) as part of the next farm bill will be obvious to farmers and policy makers as Congress begins assembling new agricultural policy this spring,” according to a NMPF press release. Panelists agreed that the risk management approach embodied in the DSA “provides a cost-effective safety net for farmers.”

University of Minnesota economist Marin Bozic reported that farmers who enroll in the DSA will find that the program “works as catastrophic risk insurance. It reduces extreme margin risk, as it pays you the most when you need it the most.”

He said that farmers will likely view the risk of not enrolling in the program as far greater than being part of it. Regarding concerns that milk production growth could be restricted by the DSA’s market stabilization component, Bozic told the crowd that producers using the three-month rolling base will experience milk production growth over the long term similar to if they were not part of the program.”
DBU’s Dave Natzke attended the conference and reported in Friday’s DairyLine that attendees were told that “About 58 percent of U.S. dairy farm workers were born in a country other than the U.S., so dairy has a big stake in the current immigration reform debate. And, due to the political nature of that debate, immigration reform faces a small window of opportunity in the 113th Congress,” according to Kristi Boswell, with the American Farm Bureau Federation.

Some key bipartisan congressional committees are expected to introduce immigration reform proposals this month, according to Natzke, “But, as we all know, agreement doesn’t come easy for this Congress, and Boswell warned dairy co-op leaders if there is no consensus by August, this latest opportunity to provide dairy with a legal, stable workforce may be lost.”

National Milk’s Jamie Casteneda said Texas A&M University research shows dairy farms with foreign-born workers produce about 70 percent of all milk in the U.S. Through its membership in the Agricultural Workforce Coalition, National Milk is working with other groups to craft a plan that not only addresses the current dairy workforce, but helps develop a visa program to ensure an adequate dairy labor supply in the future. 

CDFA lowers milk price
The California Department of Food and Agriculture (CDFA) announced its May Class I milk price this week at $19.39 per cwt. for the north and $19.66 for the south, down 10 and 11 cents respectively from April but $2.45 above May 2012. That put the 2013 northern average at $19.66, up from $18.03 at this time a year ago. The southern average, at $19.93, is up from $18.30 a year ago. The May Federal order Class I base price is announced by USDA on April 17.

The California Assembly Agriculture Committee postponed a hearing on a bill concerning the whey value in Class 4b milk price formulas until May 1. Originally scheduled for April 17, the hearing will begin at 1:30 p.m. in room 126 at the State Capitol, Sacramento, Calif., according to Western United Dairymen.
DBU reports that California Assemblyman Richard Pan (D-Sacramento, Calif.) introduced AB 31 in December 2012 which would require the CDFA to more closely align the whey value in the California 4b formula with the regulated minimum price for whey found in surrounding states. 

The formula could set the whey value at no less than 80 percent of the dry whey value used in federal market order minimum producer prices Class III milk. Both Class 4b and Class III milk are used to produce cheese. If approved by the Ag Committee, it would move to the Assembly Appropriations Committee for fiscal review, and then on to the Assembly floor for consideration by the 80-member chamber, says DBU.