Digest highlights

First-quarter milk output: Texas is No. 3

Preliminary USDA data indicates Texas surpassed Idaho as the third-leading milk production state during the first quarter of 2022.

Natzke dave
Editor / Progressive Dairy

During the January-March 2022 period, preliminary estimates show Texas produced 4.072 billion pounds of milk, up 4% compared to the same period a year earlier. Idaho first-quarter 2022 production, estimated at 4 billion pounds, was up 0.1%. Texas averaged 634,000 cows during the quarter, up 17,000 head from the year before, with Idaho averaging 652,000 head, up just 1,000 cows from a year earlier. At 6,425 pounds, Texas had a slight edge in milk output per cow during the first quarter of 2022, above Idaho’s average of 6,135 pounds over the same period. All first-quarter estimates are subject to revision.

Based on revised estimates, Idaho held a slight edge over Texas during the fourth quarter of 2021. Idaho produced 4.014 billion pounds of milk during the quarter, compared to 3.929 billion in Texas and 3.812 billion pounds in New York.

With seasonal weather a factor, average monthly milk production per cow tends to be higher in Texas than Idaho during the first and fourth quarters of each year, with Idaho surpassing Texas in second and third quarters.

For more on March and first-quarter 2022 USDA milk production data, read: March 2022 milk production still down but cow numbers jump.

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May 2022 Class I base price hits record high

The Federal Milk Marketing Order (FMMO) advanced Class I base price set a new all-time record high in May, surpassing the previous record set in 2014.

At $25.45 per hundredweight (cwt), the May price is up $1.07 from April 2022 and $8.35 more than May 2021. It’s also 98 cents higher than the previous high of $24.47 per cwt in May 2014.

The five-month average 2022 Class I base is $22.81 per cwt, up $7.11 from the January-May average of $15.70 cwt in 2021, and is now the highest average for that period on record.

Class I zone differentials are added to the base price of each FMMO principal pricing point to determine the actual Class I price in each FMMO. With those additions, May 2022 Class I prices will average approximately $28.27 per cwt across all FMMOs, ranging from a high of $30.85 per cwt in the Florida FMMO #6 to a low of $27.25 per cwt in the Upper Midwest FMMO #30.

In May, the newer Class I mover “average-of plus 74 cents” formula will help boost Class I prices paid to producers compared to the previous ”higher-of” formula.

The difference between the advanced Class III skim milk pricing factor ($13.68 per cwt) and the advanced Class IV skim milk pricing factor ($14.82 per cwt) declined from April to $1.14 per cwt.

Based on Progressive Dairy calculations, the Class I mover calculated under the higher-of formula would have resulted in a Class I base price of $24.28 per cwt, 17 cents less than the price determined using the average-of plus 74 cents formula.

Acreage profitability advantage has swung to corn

The USDA’s Prospective Planting report indicated less corn and more soybean acreage in 2022. For some producers who still have time, however, those intentions may be changing.

Based on the report, released March 31, 2022 corn acreage was estimated at 89.5 million acres, down 4% (3.87 million acres) from last year. Soybean-planted area for 2022 was estimated at a record 91 million acres, up 4%.

Since that time, corn futures prices have been rising, with Chicago Mercantile Exchange (CME) contracts hitting about $8 per bushel in May and July 2022 and averaging about $7.50 per bushel for September 2022-July 2023.

In Northern climates where planting is behind due to weather conditions, the corn futures price hike is affecting the profit outlook, note agricultural economists with the University of Illinois and Ohio State University.

Based on their analysis, corn planted in central Illinois from April through June 10 was projected to be more profitable than soybeans by a large margin. For example, corn planting has a $225 per acre advantage on April 29 and $228 per acre on May 6, declining to $108 per acre on June 10.

Read: Corn projected more profitable than soybeans well into June.

The economists used current fall delivery grain bids and current fertilizer prices, also incorporating yield losses by planting dates. Land costs were not included. Maximum yields were set at 235 bushels per acre for corn and 75 bushels per acre for soybeans.

Prices used to make the projections were based on mid-April 2021 cash bids for fall delivery in Illinois: $7 per bushel for corn and $14.80 per bushel for soybeans. These are mid-April 2021 cash bids for fall delivery in Illinois.

As of April 17, the USDA’s Crop Progress report indicated less than 4% of intended corn acreage and 1% of the intended soybean acreage had been planted.

GDT price index lower

The latest Global Dairy Trade (GDT) auction saw the overall index decline 3.6%, with individual commodity prices all lower. By category, prices were:

  • Skim milk powder was up 4.2% to $4,408 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was down 4.4% to $4,207 per MT.
  • Butter was down 3.7% to $6,640 per MT.
  • Cheddar cheese was down 3.9% to $6,185 per MT.
  • Anhydrous milkfat was down 1.3% to $6,802 per MT.

The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction is May 3.

Georgia: Checkoff referendum updates

Georgia dairy producers have approved continuation of a state dairy promotion checkoff and will be voting on the continuation of a separate checkoff to fund producer-oriented programs.

Voting in March, Georgia dairy producers overwhelmingly approved a referendum maintaining a 10-cent-per-cwt checkoff on milk produced in the state. Checkoff dollars fund local and state education and promotion programs through the Georgia Milk Commission and regional programs through the Dairy Alliance. Without approval, all 15 cents per cwt of a mandatory dairy checkoff would have gone to programs administered by the National Dairy Promotion and Research Board (NDB).

Referendum ballots to determine continuation of a 1-cent-per-cwt checkoff to fund the Georgia Milk Producers (GMP) are being mailed to producers at the end of April. Ballots are being mailed by the Georgia Department of Agriculture and must be returned May 1-30. The referendum, held every three years, must be approved by at least a two-thirds majority of Georgia dairy producers returning ballots.

Georgia Milk is a producer organization created to represent dairy producers’ interests at various promotional events in the legislative arena and at state and federal pricing and environmental hearings. GMP also conducts dairy producer workshops, conferences and seminars.  end mark

Dave Natzke