Digest highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

See us at World Dairy Expo

The 55th World Dairy Expo is being held next week in Madison, Wisconsin. Not only does it bring together the latest in dairy innovation and the best cattle in North America, it’s also an opportunity to renew or create new relationships with other dairy producers and industry representatives, including members of the Progressive Publishing team.

While attending the world’s largest dairy-focused trade show, dairy and forage seminars and a world-class dairy cattle show, be sure to stop by Progressive Publishing trade show booths. Progressive Publishing will be represented by more than 20 members of the editorial, sales and administrative staffs.

Progressive Dairy’s trade show booth is located at booths 1103-1104, on the far south end of the exhibition hall. Sister publication Progressive Forage is located in booth 558 in the trade center, near the entrance of the room hosting forage-related seminars and the World Forage Analysis Superbowl.

At each booth, Progressive Publishing staff will be available to help you establish a free account on our new dynamic website. By creating your account, you’ll be able to sign up for or renew subscriptions to Progressive Dairy, Progressive Forage and Progressive Cattle magazines and related digital newsletters. All current newsletter subscribers will need to resubscribe through this platform, as your existing subscription will soon expire.

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A reminder, the traditional World Dairy Expo schedule has changed. The 2022 schedule kicks off with youth activities on Sunday, Oct. 2. The five-day dairy cattle show begins on Monday, Oct. 3, and a four-day trade show begins on Tuesday, Oct. 4. Trade show hours are from 9 a.m. to 5 p.m. Tuesday through Thursday and 9 a.m. to 4 p.m. on Friday. All activities conclude Friday evening, Oct. 7.

Vitaliano: Near-term uncertainty

Strong exports and modest milk production growth are being countered by higher input costs and falling margins, notes National Milk Producers Federation’s (NMPF) Peter Vitaliano. Summarizing dairy markets in the September 2022 Dairy Management Inc./NMPF Dairy Market Report, he suggests factors that would normally signal boom times are being tempered by uncertainties that may not be resolved in the near term.

With the onset of inflation, domestic dairy product use continued to fall below year-earlier levels for most of the major dairy products and for total milk equivalents during the May-July period.

For more information on commercial use, dairy trade, milk production, product inventories, prices and margins, click here.

Dairy cull cow marketing jumped in August

Marketing of U.S. dairy cull cows through U.S. slaughter plants increased in August but remained behind last year’s pace.

At 266,100 head, the August total was up 36,000 from July and about 4,700 more than August 2021. It was the third-highest monthly total this year. August 2022 had one more non-holiday weekday/Saturday than the year before.

At 2.17 million head, year-to-date (January-August 2022) cull dairy cow slaughter was about 55,700 less than the same period a year earlier. Factoring in the slowdown, the USDA’s Milk Production report estimated there were 9.427 million cows in U.S. herds in August 2022, down about 11,000 head from the same month a year earlier.

Drought is pushing beef cattle producers to reduce cow herds. Year-to-date beef cow slaughter is up more than 317,000 compared to the same period in 2021, topping 2.6 million head.

Heaviest dairy culling during August 2022 occurred in the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 65,100 head. That was followed in the Southwest (Arizona, California, Hawaii and Nevada), where 60,800 dairy cows were marketed for beef. 

Other regional totals were estimated at 42,600 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 38,100 head in Alaska, Idaho, Oregon and Washington; and 30,000 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

Primary data for the USDA’s Livestock Slaughter report are obtained from reports completed by inspectors from the USDA Food Safety and Inspection Service (FSIS). These counts are combined with data from state-administered non-federally inspected (NFI) slaughter plants to derive total commercial slaughter estimates. The USDA estimates there are approximately 900 livestock slaughter plants in the U.S. operating under federal inspection and nearly 1,900 state-inspected or custom-exempt slaughter plants.

Fed ratchets interest rates higher

The board of governors of the Federal Reserve System voted unanimously to approve a 0.75% increase in the primary credit rate to 3.25%, effective Sept. 22. It’s the highest since early 2008. The Fed also signaled more rate hikes to come. 

Prior to the announcement, second-quarter 2022 average interest rates charged on variable and fixed-rate loans were already trending higher in several major district Federal Reserve banks serving agricultural markets.

Based on quarterly reports and newsletters, average interest charges on variable-rate operating loans across Chicago, Dallas, Kansas City and Minneapolis Federal Reserve districts averaged 5.52% as of July 1, up from 4.88% during the previous quarter.

  • In the Chicago district, average nominal interest rates on new operating, intermediate and farm real estate loans stood at 5.42%, 5.53% and 5.17%, respectively.
  • In the Dallas district, interest rates on variable operating, intermediate and real estate loans averaged 5.67%, 5.53% and 5.3%, respectively; rates on fixed loans averaged 6%, 5.81% and 5.45%, respectively.
  • In the Kansas City district, interest rates on variable operating, intermediate and real estate loans averaged 5.55%, 5.47% and 5.18%, respectively; rates on fixed loans averaged 5.75%, 5.75% and 5.5%, respectively.
  • In the Minneapolis district, interest rates on variable loans operating, machinery and real estate loans averaged 5.45%, 5.3% and 5.1%, respectively; rates on fixed loans averaged 5.5%, 5.5% and 5.4%, respectively. 

Next district reports will update interest rates as of Oct. 1.

Longhorned tick discovered in northern Missouri

The Asian longhorned tick has now been found in northern Missouri, spreading a potential herd health and economic burden to beef and dairy cattle producers further west. According to the USDA’s Animal Plant Health Inspection Service map, the Asian longhorned tick has been found in about 15 states, primarily in the Southeast, Mid-Atlantic and Northeast.

Although the ticks are known to transmit a number of human disease pathogens, the current threat appears to be mostly bovine theileriosis, which may cause weight loss and decreased milk production in cattle. Symptoms of this disease can be often mistaken for anaplasmosis, and the latest tick discovery was found by University of Missouri (MU) College of Veterinary Medicine researchers Rosalie Ierardi and Ram Raghavan, who were conducting anaplasmosis surveillance research. 

Ierardi encourages producers who notice weakness, jaundice and pregnancy loss in their cattle to contact their local veterinarian and the MU Veterinary Medical Diagnostic Laboratory for assistance with tracking down the causes for such signs. There have currently not been any confirmed cases of bovine theileriosis in Missouri cattle.

While most ticks reproduce traditionally, female longhorned ticks can lay thousands of eggs without the help of a male, which makes it easier for them to quickly establish in new areas. Infestation of the longhorned tick can lead to possible transmission of bovine theileriosis, a disease that kills red blood cells in cattle.

Farmland values to plateau

Farmland values, which hit record-breaking prices this summer, are headed for a plateau, according to Jason Burbage, president of National Land Realty.

The current farmland market is skewed due to various pressures like climate change, the war in Ukraine and the lasting effects of COVID-19. The past price increases are unsustainable, and higher interest rates will further stabilize the market, he said. A rising debt-to-income ratio in the current ag market is a possible risk area.

According to a survey conducted by the Federal Reserve Bank of Chicago, roughly three-quarters of respondents in Illinois, Indiana and Iowa believed their farmland to be overvalued. That same survey reports that 25% of respondents anticipated farmland values to continue rising, while 71% thought the values had stabilized. 

Aside from farmland, pastureland has taken a significant hit recently due mainly to the severe droughts that have swept through the Southern and Western states. Looking ahead to 2023, drought relief could help help the market level out, at least for farmland and pastureland, Burbage said. If some of the other pressures are remedied, he forecasts a strong and stable land market in 2023.