In politics, Congress adjourned without passing a farm bill. National Milk’s (NMPF) Chris Galen told me the lame duck session will likely take it up after the November elections.
An NMPF press release reports that a new analysis by the Congressional Research Service (CRS) “points out the advantages of the margin insurance and market stabilization-based approach to reforming dairy policy.”
The report was released “to help members of Congress and their staffs better understand the details of current dairy policy, and potential changes to those programs,” NMPF said. “More importantly, the CRS report provides an impartial view of the specific programs contained in the Dairy Security Act of the pending farm bill.” Complete details are posted at www.nmpf.org
Production slips in August
August milk production in the top 23 states slipped to 15.3 billion pounds, according to USDA’s preliminary data in its latest Milk Production report, down 0.2 percent from August 2011, and not as weak as expected but the first decrease since January 2009. The 50-state output was estimated at 16.38 billion, down 0.3 percent. Revisions subtracted 24 million pounds from the original July estimate, now put at 15.5 billion, up 0.7 percent from a year ago.
Cow numbers totaled 8.5 million head, down 4,000 from July but 32,000 more than a year ago. Output per cow averaged 1,803 pounds, down 10 from 2011.
California’s milk production plunged 5.8 percent from a year ago, despite 10,000 more cows, as heat drove output per cow down 125 pounds. Wisconsin was up 4.9 percent thanks to a 75 pound gain per cow and 7,000 more cows.
Idaho was off 0.2 percent despite a 10 pound gain per cow. Cow numbers were down 4,000 head. New York was up 1.9 percent on a 35 pound gain per cow. Pennsylvania was down 1.7 percent, thanks to a 15 pound loss per cow and 4,000 fewer cows. Minnesota was up 2.7 percent, despite a loss of 2,000 cows, but output per cow was up a nice 50-pounds.
Other highlights included Arizona, down 3.8 percent, on a 45 pound loss per cow and 3,000 fewer cows. Michigan was up 5.4 percent on a 50 pound gain per cow and 10,000 more cows being milked. New Mexico was off 2.9 percent on a 50 pound loss per cow and 2,000 fewer cows. Texas was down 1.9 percent, despite a gain of 5,000 cows, but output per cow was down 55 pounds. Vermont was up 0.9 percent on a 30-pound gain per cow but cow numbers dropped a thousand head. Washington State’s hot weather resulted in a drop of 3.3 percent from a year ago on a 35 pound loss per cow and 4,000 fewer cows.
Slaughter up 36K from July
Friday’s Livestock Slaughter report showed an estimated 275,300 culled dairy cows were slaughtered under federal inspection in August, up 36,300 from July and 30,700 more than August 2011. Through the first eight months of 2012, cull cow slaughter totaled 2.038 million head, up 128,200 from 2011.
Dairy cow forecasts for 2012 and 2013 in the latest Livestock, Dairy, and Poultry Outlook remain unchanged from August at 9.215 million and 9.110 million head, respectively. But, the Outlook said “The dairy cow slaughter rate and the prices of replacement heifers suggest a continued gradual decline in the dairy herd through 2013.”
Echoing the previous week’s World Agricultural Supply and Demand Estimates report, the Outlook’s reduced 2012 milk production forecast was based on lower forecast milk per cow of 21,690 pounds. Lower milk per cow is expected in the third and fourth quarters of this year due to high summer temperatures that likely adversely affected milk yields as well as tight alfalfa supplies.
Yield per cow was forecast at 21,830 pounds for 2013, unchanged from the August forecast. The slight 2013 yield increase is largely based on expected larger forage supplies.
The 2012/13 price forecast for corn was lowered from August’s projection to $7.20-$8.60 per bushel. Despite a slightly lowered corn yield forecast from August, higher estimated carrying stocks and a lowered export forecast are resulting in larger domestic supply estimates than were made earlier.
The soybean meal price was increased for 2012/13 to $485-$515 per ton. This is due to a lower soybean crush forecast for 2012/13 as soybean ending stocks are projected to reach a 9-year low.
Cash block cheese, the week of Sept. 17, hit the $2 level for the first time since Nov. 2011 as the markets contemplated the August Milk Production report and awaited Friday afternoon’s August Cold Storage data. The blocks closed Friday morning at $2 per pound, up 12.75 cents on the week and 27.25 cents above a year ago. The barrels saw a 13.25 cent jump to $1.96, 25.25 cents above a year ago. Twenty two cars of block traded hands on the week and eight of barrel. The lagging AMS-surveyed U.S. average block price slipped 0.2 cent, to $1.8515, while the barrels averaged $1.8190, down 1.4 cents.
Milk for cheese manufacturing is tight in the East, according to USDA’s Dairy Market News, while Central and Western plants are finding adequate levels. Additional milk supplies are available, but competition from alternative products has that milk at a premium. USDA reported that exports of cheese so far this year are up 20 percent from a year ago. Assistance has come from the CWT program and is aiding in sales volume.
CWT accepted 19 requests for export assistance this week to sell 3.32 million pounds of cheese and 357,149 pounds of butter to customers in Asia, Central America and the Middle East. The product will be delivered through February 2013 and raised CWT’s 2012 cheese exports to 85.7 million pounds plus 57.4 million pounds of butter and 123,459 pounds of anhydrous milk fat.
The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Lee Mielke may write to him in care of this publication.