In your June 2022 issue . . .
APRIL’S $27.10 ALL-MILK PRICE SHATTERED the previous record by $1.20 per hundredweight (cwt). The prior record stood for one short month as the March 2022 All-Milk price netted $25.90. Prior to this time period, the all-time best was $25.70 posted in September 2014.
WHILE MILK PRICES WERE UP, SO WERE COSTS this April. When compared to September 2014, alfalfa hay climbed 25% to reach $243 per ton, soybeans jumped 56% and sold for $15.08 per bushel, and corn shot skyward by 116% to reach $7.08 per bushel. Both fuel and fertilizer are up substantially since 2014, too. Only replacements showed lower values, moving from $2,140 in 2014 to $1,570 in the eight-year comparison.
MAY MILK CHECKS WILL BE EVEN HIGHER than April as the four Federal Milk Marketing Order (FMMO) price benchmarks fell one penny short of achieving the first ever $25-plus-across-the-board milk price in U.S. history. Class IV was the lone holdout at $24.99 per cwt.
AT $25.21, MAY’S CLASS III BROKE the $24.60 record set eight years ago in September 2014. Class II fell short of breaking the $26.11 high mark set in the same month of 2014 as the FMMO announced a $25.87 Class II this May. The Class I milk price matched Class II at $25.87.
FUTURES CONTRACTS MOVED THROUGHOUT MAY, yet ended early June higher. On May 2, June-to-December Class III contracts traded at a $23.35 average and closed at a $24.20 average on June 2. Class IV showed more upward movement, beginning May at $23.80 and finishing at $25.40 per cwt. in early June trading on the CME.
CONCERN IS MOUNTING WHETHER OR NOT milk prices can hold. There are signs that some consumers cannot afford the higher dairy product prices. On the flip side, dairy does remain a relatively affordable source of protein, fat, and other nutrients when compared to alternatives.
GLOBALLY, MILK PRICES FELL IN MAY with milk powders sliding the most. This trend was underpinned by lower buying interest from China.
U.S. MILK PRODUCTION ONCE AGAIN SPUTTERED as April milk fell 1% nationally when compared to the same time last year. Year-to-date, milk production has fallen every month since the start of 2022.
FOR THE SECOND TIME, THE U.S. is requesting a dispute settlement with Canada under the United States-Mexico-Canada (USMCA) trade agreement. Specifically, the U.S. is challenging Canada’s dairy tariff-rate quota (TRQ) allocation measures that deny access to eligible applicants.
DESPITE ISSUES WITH CANADA, USDA raised its forecast for U.S. dairy exports to a projected $8.4 billion in 2022. This was $600 million higher than its February prediction. If achieved, international dairy product shipments would climb 15% over the 2021 record of $7.3 billion.
BUTTERFAT BROKE A 76-YEAR-OLD RECORD. The 4.01% butterfat level posted in 2021 moved past the previous 3.98% butterfat record set both in 1944 and 1945. This market data comes from USDA, and it’s the most accurate measure for butterfat levels of U.S. milk. To learn more about this seismic shift, turn to pages 312 and 313.
WITH WHEAT, CORN, BARLEY, AND OILSEEDS in short supply due to the Russian invasion of Ukraine, the White House and USDA will release some 4 million acres from the final year of Conservation Reserve Program (CRP) contracts. The early release will allow farmers to plant a fall-seeded crop prior to the traditional October 1 deadline.
INVESTMENT IN MEAT PROCESSING CAPACITY has become a USDA priority. The federal agency pledged $325 million to build new or expand existing independent meat and poultry processing capacity. The department has since received $900 million in grant requests.