An association for cooperative businesses in Minnesota and Wisconsin, called the Cooperative Network, plans to hold a Federal Milk Marketing Orders Forum on Sept. 24 in Bloomington, Minn., according to a report on the International Dairy Foods Assoc. (IDFA) website. The association believes that California’s consideration of a Federal market order could open the door for additional reforms to the national system.

“With California’s petition and 2016 being an election year, we think there’s a good chance the federal milk marketing orders could soon be open to broader reform,” said David Ward, Cooperative Network director of government relations, who manages the association’s dairy program. 

“We want to be sure our milk producers and processors in the Upper Midwest proactively examine the current system and have the opportunity to offer their input to guide any future changes.” 

Several national and regional dairy economists have been invited to discuss the federal milk marketing orders in the Upper Midwest, how the system works for other regions, what the addition of a California order could mean and the process for changing federal orders. 

 

As dairy producers contemplate signup for the next round of the Margin Protection program, Dairy Herd Management (DHM) reports that USDA’s Risk Management Agency (RMA) moved a second supplemental allocation of $1 million to the federal Livestock Gross Margin for Dairy (LGM-Dairy) income margin insurance program, according to Brian Gould, University of Wisconsin dairy economist.

Earlier this year, the dairy program exhausted its share of the $20 million in fiscal year 2015 (FY 2015) funding designated for all USDA-RMA LGM insurance programs. In July, RMA allocated $1 million in funds from unused portions of other LGM livestock programs. About $800,000 of that total was used during the July LGM-dairy sales period, according to Gould.

The remaining FY 2015 LGM-Dairy sales periods are Aug. 28-29 and Sept. 25-26. Contract purchases start at 4:30 p.m. (Central) and must end by 8 p.m. (Central) the next day. The September offering is conditional on the availability of funds in the LGM-Dairy program. The funding situation for September should be known early in the month, says DHM.

Dairy margins were mixed the past two weeks, strengthening slightly in nearby periods while deteriorating in the first half of 2016, according to the latest Margin Watch from Chicago-based Commodity & Ingredient Hedging LLC. An extremely bearish August WASDE report from USDA pressured feed values while milk prices were steady to higher in nearby months and weaker in deferred contracts since the end of July. USDA shocked the market with their updated yield and production figures for corn and soybeans, which were well above the average of pre-report expectations and also outside the range of estimates. 

 

 Production up

U.S. milk production in the top 23 producing states totaled16.6 billion pounds in July, according to USDA’s preliminary data, up a higher-than-expected 1.2 percent from July 2014. July 2014 output was up 3.8 percent from 2013. The 50-state July 2015 output, at 17.65 billion pounds, was also up 1.2 percent. Revisions added 40 million pounds to the original June tally, now put at 16.4 billion pounds, up 0.9 percent from a year ago.

July cow numbers totaled 9.32 million head in the 50 states, up 1,000 head from June and 54,000 more than a year ago. Output per cow averaged 1,893 pounds, up 17 pounds from June and 12 pounds above July 2014.

California continues to lag year-ago output, down 3.3 percent from July 2014, following a 4.3 percent decline in June. The July drop came on a 65-pound drop per cow and 1,000 fewer cows. Most analysts have blamed the drought, but the Aug. 17 Daily Dairy report says: “A closer look at feed costs suggests that the drought has contributed little to the slowdown in California milk production,” and makes the case for low milk prices being responsible.

Wisconsin, meanwhile, was up 5.3 percent in July following a 5.5 percent gain in June. The cooler than normal weather enabled an 85-pound gain per cow in July, and there were 9,000 more cows milked. The Badger State’s June output per cow was revised up 35 pounds from last month’s report, and overall milk production was revised up 48 million pounds.

Idaho was up 0.7 percent despite a 10-pound loss per cow. Cow numbers were up 7,000 head. New York was up 3.2 percent, thanks to a 50-pound gain per cow and 4,000 more cows. Pennsylvania was up 2.3 percent on a 40 pound gain per cow and Minnesota was up 4.2 percent on a 70-pound gain per cow.

Michigan was up 6.3 percent, thanks to a 50-pound gain per cow and 15,000 more cows, while New Mexico went the other way, dropping 4.2 percent on a 90-pound loss per cow. South Dakota continues to pour it in the tank, up 12.3 percent, on a 25-pound gain per cow and 9,000 more cows, while Texas dropped 1.2 percent despite a 10-pound gain per cow. Cow numbers were down 8,000 head. The heat took its toll in Washington State, up just 0.2 percent after a 20-pound loss per cow. Cow numbers were up 3,000 head.

Dairy cow culling continued to increase, according to USDA’s latest Livestock Slaughter report issued Aug. 20. The data show an estimated 238,600 dairy cows were slaughtered under Federal inspection in July, up 17,100 head from June and 7,000 head, or 3.0 percent, more than July 2014. 

Looking at the first seven months of 2015, 1.7 million head exited the dairy business, up 72,500 or 4.5 percent from the same period a year ago.