Update highlights

Class III-IV milk prices continue to climb

The Federal Milk Marketing Order (FMMO) Class IV milk price set another record high in March, while the Class III milk price hit a 16-month high.

Natzke dave
Editor / Progressive Dairy

At $24.82 per hundredweight (cwt), the March 2022 Class IV milk price rose 82 cents from February and is $10.64 more than March 2021.

The March 2022 Class III milk price rose $1.54 from February to $22.45 per cwt, the highest since November 2020, when government purchases of cheese for food boxes pushed prices up. The Class III price is up $6.30 from March 2021.

The Class II milk price tagged along in March, up nearly $1 from February to $24.76 per cwt.

March Class III-IV milk prices again moved higher due to increases in values of butterfat, protein and milk solids used in monthly milk price calculations.

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The value of butterfat rose more than 7 cents from February to $3.09 per pound. The value of milk protein jumped more than 40 cents to $2.72 per pound, the highest since last November. The value of nonfat solids rose more than 6.5 cents to $1.61 per pound, while the value of other solids increased about 1.5 cents to 61 cents per pound.

The March Class III-IV price relationship maintained a $2.37-per-cwt spread. Additionally, the Class IV price is close to the March FMMO average Class I milk price of $25.70 per cwt, which includes zone differentials. Those factors provide incentives for Class IV depooling.

FMMO administrators are scheduled to announce March uniform prices, producer price differentials and pooling volumes by April 14.

Dairy cull cow marketing remains slower

Marketing of U.S. dairy cull cows nudged higher in February, although the year-to-date pace is the slowest two-month total since 2017. Factoring in the slowdown, there were about 96,000 fewer cows in the U.S. dairy herd compared to a year earlier.

At 266,500 head, February 2021 dairy cow slaughter in federally inspected plants was up about 5,700 from January 2021 and up 1,300 head from February 2021, based on the USDA’s monthly Livestock Slaughter report. Both February 2022 and 2021 had 19 non-holiday weekdays and four Saturdays.

The USDA’s Milk Production report previously estimated there were 9.37 million cows in U.S. herds in February 2022, down from 9.466 million during the same month a year earlier.

Heaviest dairy culling during February 2022 occurred in the Southwest (Arizona, California, Hawaii and Nevada), where 65,000 dairy cows were marketed for beef. That was followed by the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 58,900 head.

Other regional totals were estimated at 42,400 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 33,300 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas; and about 35,700 head in Alaska, Idaho, Oregon and Washington.

Cull cow prices jump

While higher milk prices are providing incentives to keep cows in the herd, cull cow prices are also on the rise.

U.S. prices received for cull cows (beef and dairy, combined) averaged $77.90 per cwt during February 2022, up $6.30 from January 2022, up $12.30 from February 2021 and the highest monthly average since August 2016.

2022 hay acreage could be smallest since 1907

There’s still time and weather to impact 2022 cropping plans, but initial indications are that U.S. acreage devoted to dry hay production could be the lowest in 115 years.

According to the USDA’s Prospective Planting report released March 31, U.S. producers intend to harvest 50.3 million acres of all hay in 2022, down 1% from 2021. If realized, this will represent the lowest total hay harvested area since 1907.

Among the 24 major dairy states, area devoted to hay is projected at 27.27 million acres, a decline of 460,000 acres from the year before, due primarily to a 600,000-acre decline in Texas. Hay acreage declines are also expected in 10 other dairy states, led by New York, Virginia, Illinois and Pennsylvania.

Dairy states expected to boost hay acreage in 2022 are led by South Dakota, up 100,000 acres, to 2.5 million. Colorado, Wisconsin and Minnesota are each forecast to boost hay acreage by about 70,000 acres, with Kansas up 60,000 acres. Hay acreage in Idaho and California is forecast to increase 20,000 and 10,000 acres, respectively.

Read: 2022 hay acreage could be smallest since 1907.

Soybean acreage expected to grow

In addition to hay acreage, the USDA’s Prospective Planting report provided forecasts for other major dairy feedstuffs and other crops. With inflation, high input costs and supply concerns, geopolitical unrest and drought, there’s plenty of uncertainty regarding 2022 crop acreage. Here’s a summary of early acreage estimates from the USDA:

  • Corn-planted area for all purposes in 2022 is estimated at 89.5 million acres, down 4% (3.87 million acres) from last year, with acreage expected to be down or unchanged in 43 of the 48 estimating states.

  • Soybean-planted area for 2022 is estimated at a record 91 million acres, up 4% from last year. Compared with last year, planted acreage is up or unchanged in 24 of the 29 estimating states. Increases of 250,000 acres or more are anticipated in Illinois, Indiana, Iowa, Minnesota, Missouri, South Dakota and Tennessee. If realized, the planted area in Illinois, Kentucky, Michigan, Missouri, Nebraska, Ohio, South Dakota and Wisconsin will be the largest on record.

  • All wheat-planted area for 2022 is estimated at 47.4 million acres, up 1% from 2021. Even with the increase, this represents the fifth-lowest all wheat-planted area since records began in 1919.

  • Cotton-planted area for 2022 is estimated at 12.2 million acres, up 9% from last year.

Corn, soybean stocks larger

The USDA’s National Ag Statistics Service also released a quarterly Grain Stocks report to provide estimates of on-farm and off-farm stocks of major crops as of March 1. Key findings in that report include:

  • Corn stocks totaled 7.85 billion bushels, up 2% from the same time last year. On-farm corn stocks were up 1% from a year ago, while off-farm stocks were up 3%.

  • Soybeans stored totaled 1.93 billion bushels, up 24% from March 1, 2021. On-farm soybean stocks were up 26% from a year ago, while off-farm stocks were up 22%.

USDA to begin payments to livestock producers impacted by drought, wildfire

The USDA’s Farm Service Agency (FSA) will begin distributing emergency relief payments to eligible livestock producers under the Livestock Forage Disaster Program (LFP). The payments, through the new Emergency Livestock Relief Program (ELRP), address forage losses and supplemental feed costs due to severe drought or wildfire in 2021.

The LFP provides up to 60% of the estimated replacement feed cost when an eligible drought adversely impacts grazing lands or 50% of the monthly feed cost for the number of days the producer is prohibited from grazing the managed rangeland because of a qualifying wildfire.

The FSA received more than 100,000 applications totaling nearly $670 million in payments to livestock producers under LFP for the 2021 program year.

For details and eligibility requirements, read the full announcement here.  end mark

Dave Natzke