In your July 2021 issue . . .
HIGH FEED PRICES CONTINUED to activate the Dairy Margin Coverage (DMC) program. In May, the milk-to-feed margin was estimated to be $6.89. That, in turn, led to a $2.61 per cwt. payout for farmers buying the maximum $9.50 coverage level in USDA’s farm bill program.
THE FEED SIDE OF THE DMC EQUATION was based on $5.91 per bushel corn, $421 per ton soybean meal, and $210 per ton alfalfa hay.
CLASS III FUTURES SLID 85 CENTS to settle at $17.70 for the July-to-December contract bundle in trading from June 1 to July 1. During that same time, Class IV fell by the same amount to net $16.65.
STRONG PRODUCTION AND STRONG COW NUMBERS were principle reasons for the price downturn. In May, U.S. cow numbers climbed to 9.505 million . . . the highest level since 1994. That total was 145,000 higher than May 2020. Meanwhile, cows sent to slaughter were down.
MAY’S MILK PRODUCTION ROSE 4.6%. However, those who monitor milk supplies should track another metric — components. The total pounds of fat and protein in May’s milk rose 5.9% when compared to 2020.
COULD DEMAND BE SLIPPING? The Food Box program has been sunset and schools are out for summer. However, that alone cannot explain the funk in the market. Perhaps commercial demand or exports may have dropped as well. USDA’s June Cold Storage report will shed more light.
CHINA BUOYED DAIRY DEMAND in the first half of the year. Sales could have been even more robust had it not been for global shipping issues created by tight labor supplies, limited trucking capacity, diminished space on ocean vessels, and deficient port capacity stateside.
IN AN EFFORT TO ASSIST DAIRIES, the California Department of Public Health put together a pilot program with community-based organizations in which mobile vaccination vans would go from farm to farm with interpreters in an effort to bolster the state’s defenses against COVID-19.
INTEREST RATES COULD RISE prior to the close of 2023 as 11 of 18 Federal Reserve officials believe rates must climb to thwart inflation.
HOW MUCH MILK WAS DUMPED during the height of the pandemic? The table below details that milk dumping peaked in April 2020 and quickly receded by May. For more insight, turn to pages 398 and 421.