Dairy bounces back

A bit of a rebound in the dairy markets the last couple of days. Cash cheese barrels gained 2.25 cents on the Chicago Mercantile Exchange on Thursday while blocks added a penny. Class III futures for June have increased 69 cents since Tuesday, the July contract has increased 69 cents since Wednesday.

Dairy Market News says milk production is variable in the Central Unites States while the South and Northeast are seeing a strong comeback in production. Florida exported 90 loads this week. The flush is yet to arrive in the West. California changed its 4b pricing formula this month and producers are seeing a higher pay price.

Some are wondering what is going to happen when schools close for the summer, right now spot loads are running even to $1.60 over but that could quickly turn-around.

Upper Midwest alfalfa crop does not look good

“This is probably the worst year for winterkill we have had in over 20 years.” That’s how University of Wisconsin Extension forage agronomist Dan Undersander describes the alfalfa crop not only in his state but across the upper Midwest. He says the southern edge of the damage area is in southern Wisconsin where 20 to 30 percent of the fields are showing damage up to 80 percent loss in Central Wisconsin. The area extends from Ontario to the Dakotas.

He says a combination of factors have contributed to the loss, a lot of the crop went dormant last fall without storing up nutrients and then the late spring was just too much to withstand. There is also a lot of evidence of winterkill especially in low spots in fields.

The situation has created a “worst-case” scenario for dairy farmers who are already running out of forage and facing a hay shortage across the upper Midwest. As a result, Undersander says farmers may need to try to salvage a stand they would usually replace. He says the best options at this point are:

  1. Keep the stand and overseed with Italian ryegrass immediately to increase first cutting yield then kill the stand and plant corn for silage 
  2. Tear the stand up and plant corn for silage
  3. Plant oats and peas for an early season crop in July then plant oats in August.

Some have tried sorghum-sudan in this situation but Undersander says that requires hot weather and that is not the norm in the affected area.  He suggests it be used only if no other seed is available. 

AUDIO:Undersander talks about the situation 6:00 mp3

In response the UW Extension has established a website of multiple materials addressing all aspects of the situation.  It is http://fyi.uwex.edu/drought2012/alfalfa-winterkill/

In a related matter:

The University of Wisconsin Extension Dairy Team is holding five producer meetings around the state to talk about feeding options. Consultants and industry professionals will talk about building rations with less alfalfa, availability, pricing and utilization of feed by-products and forage options from June to the first frost.

The sessions will be:

May 28th; 9 to 11:30 am, Bear Creek Town Hall, Bear Creek;

1:30 to 4 pm Chase Town Hall, Pulaski

 

May 29th: 9 to 11:30 am Millhome Supper Club, Kiel

1:30 to 4 pm Van Abel’s of Hollandtown, Kaukauna

 

May 30th: 9 to 11:30 am U.W. Extension Marathon County, Wausau

 

Chemical use on ’12 soybean crops outlined

The top monitoring practice for managing pests in U.S. soybean crops last year was scouting for weeds, according to the USDA’s National Agricultural Statistics Service, NASS.  The agency’s Chemical Use Survey Data for soybeans and wheat was released Wednesday.

For soybeans, it found that 94 percent of planted acres were scouted in the 19 states surveyed for the 2012 crop year. 96% of the soybean acreage used chemicals. Phosphate and potash were the most widely used fertilizers, applied to 37 percent of planted acres. Nitrogen was applied to 27 percent of planted acres. The survey found that farmers applied herbicides to 98 percent of planted soybean acres…followed by 18 percent insecticides and 11 percent fungicides.

Eighty-percent of planted winter wheat acres had chemicals applied – in the 13 states surveyed for chemical use.

Chemical use report on wheat crops in ’12

Thirteen states were surveyed by the USDA for chemical use on 2012 wheat crops and 80-percent had chemicals applied on winter wheat acres (including Nebraska, South Dakota, Missouri, Illinois and Ohio).

The National Agricultural Statistics Service (NASS) says 91 percent of spring wheat, excluding durum, had chemicals applied on four states surveyed.

Chemicals were applied on 88 percent of the durum wheat acres in two surveyed states.

Nitrogen was applied to nearly all durum and spring wheat excluding spring durum. Eight-five percent of winter wheat acres had nitrogen applied.

The report says herbicides were the most extensively used pesticide.

 

House Ag Committee sticks with Dairy Security Act

After a lengthy discussion, the House Agriculture Committee defeated an attempt to change the Dairy Security Act in the farm bill. Congressmen Bob Goodlatte (R-VA) and David Scott (D-GA) introduced their alternative plan which would provide margin insurance for milk producers but without any supply management provision.

While the two representatives cited support for their plan from dairy processors and a number of dairy producers, ranking member Collin Peterson (D-MN) countered with producer support via the National Milk Producers Federation along with a number of ag economists. Peterson stated that margin insurance without supply management would encourage overproduction even in times of low prices.

Goodlatte noted that House Speaker John Boehner opposes the Dairy Security Act and that was one of the reasons the farm bill never came to the floor in the last Congress asking, “Do we want to run into that wall again?”

The Hill reports that while House leadership may not be on-board, Chairman Lucas acknowledged the farm bill needs Peterson and the Democrats to pass the House. In the end, Goodlatte-Scott failed with 20 voting “yay” and 26 voting “nay”. The Dairy Security Act moves forward.

The farm bill passed by the Senate Ag Committee on Tuesday also contains the Dairy Security Act.

Global Dairy Trade prices decline again

Global Dairy Trade auction at Fonterra on Wednesday saw prices decline for the second consecutive sale. Overall prices declined 2.1 percent from the May 1st sale. Rennet Casein was the only product to see an increase over the last sale, up 3.7 percent. Anhydrous milk fat slipped 0.2 percent, whole milk powder was 1.7 percent lower, skim milk powder declined 2.8 percent, butter milk powder fell 5.1 percent and butter dropped 12.4 percent. There were no sales of cheddar cheese, milk protein concentrates or lactose.

Meanwhile here in the U.S.A., National Dairy Products Sales for the week ending May 11th, cheddar cheese blocks averaged $1.89 up 3.1 cents from the previous week. Barrels decreased 2.1 cents to $1.74, butter lost 3.8 cents to average $1.68, dry whey was 0.2 cents lower at 57.8 cents per pounds and nonfat dry milk increased 3.5 cents to $1.64.

It was a mixed day in the dairy markets on Wednesday; cash cheese barrels increased a half-cent on the Chicago Mercantile Exchange to $1.73 while blocks lost another 2.5 cents to $1.755. The barrel-to-block spread is down to 2.5 cents from 23 cents a couple of weeks ago. Class III futures rebounded with the June contract moving back above the $18 mark.

Farm bill support not universal as it heads to Senate floor

Agriculture Secretary Tom Vilsack

Although support for the Senate Farm Bill has carried the measure on to floor consideration, it’s not unanimous. There were five committee votes against the Senate Farm Bill. The only Democrat to vote no was Kristin Gillibrand of New York. Following the committee’s markup of the bill, Senator Gillibrand said that she has problems with the $4 billion cut in nutrition programs.

“What we’re talking about is about $90 less a month in food assistance,” she said, “and for a family, that could mean the whole last week of their groceries.”

Republican John Thune of South Dakota dissented because he thinks the bill has more than it should have.

“What famers in South Dakota tell me is, ‘we want a good strong crop insurance program,’ and I think that this bill has that,” Senator Thune said, but he added, “a lot of these other bells and whistles being added are very costly.”

Rodger Johnson at Washington Watch 2013Specifically, Senator Thune thinks that target prices, and especially the fixed target prices for rice and peanuts should not be in the bill. Likewise, Nebraska Republican Mike Johanns thinks the day has come and gone for taxpayers to be guaranteeing a price for peanut and rice growers.

“They don’t respond to market signals because they don’t have to; we’ve covered their cost of production if not more,” said Senator Johanns, “and so at the end of the day, I just think target prices; that’s kind of 1980s agriculture.”

Meanwhile, for every no vote, there were three votes in support of the Senate Farm Bill.

What seems to result in broad committee support is that the measure ends direct payments in favor of risk management tools such as crop insurance.

2013_Carl_Zulauf_Washington_WatchIn comments during committee discussion, Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) spotlighted what she says are very significant reforms, including conservation compliance linked to crop insurance subsidies.

“The point isn’t to penalize farmers,” said Senator Stabenow, addressing the committee she chairs, “but to conserve our resources and allow farmers to be the best stewards of our land.”

Similar support is expressed by the Obama administration. While the markup was happening Tuesday, U.S. Agriculture Secretary Tom Vilsack was telling farm broadcasters that he feels it’s not unreasonable to ask farmers for something in return for crop insurance subsidies.

“We want to work with you to make sure that conservation is part of your thought process,” said Secretary Vilsack, explaining that he doesn’t think it’s unreasonable to expect something in return for taxpayer subsidized crop insurance premiums. “I think that’s a pretty good deal; I think that’s a fair deal.”

2013_AFBF_Bob_Young_Washington_WatchAlso in Washington Tuesday to address farm broadcasters, Dr. Carl Zulauf, agriculture economist at Ohio State University, said that, although not unanimous among committee members, the quick markup, reportedly only a few hours, “suggests that the bill will have an easier time than otherwise it might have on the floor,” he told Brownfield Ag News.

“There are provisions in this bill that moves it closer to the House bill,” Zulauf added, “so it suggests that we’re beginning the process of trying to reconcile and finding appropriate compromise for these farm bills.”

Farm organizations seem to have long ago conceded that cuts in the funding for such legislation are unavoidable. Their primary concern is to get a five-year farm bill passed, for which there’s higher confidence than last year.

“I think we’re going to get a farm bill done this year,” said Bob Young, chief economist for the American Farm Bureau Federation, in an interview with Brownfield Ag News Tuesday following passage by the Senate Agriculture Committee. Young also cites “right noises out of the House leadership as well about moving legislation.”

Getting ultimate passage and a signed bill in place is also a priority for members of the National Farmers Union. Their president, Roger Johnson, says the most important part of that is a farm safety net.

“We’ve long felt that a safety net should be really about two things,” Johnson told Brownfield, “it should help in times of disaster, and the other thing is it should help when the market has a long-term price collapse.”

As for the Senate Ag Committee’s performance, “they’ve done what they can with the money that was provided to them,” said Young. “They’ve been handed a very tough task with the cuts that they’ve had to come up with.”

Contributing to this article was National Association of Farm Broadcasting pool reporter Ken Root.

Photos top down: Agriculture Secretary Tom Vilsack, National Farmers Union President Roger Johnson, Ohio State University Ag Economist Carl Zulauf and American Farm Bureau Chief Economist Bob Young.

AUDIO: Bob Young (1 min. MP3)

AUDIO: Carl Zulauf (1 min. MP3)

AUDIO: Roger Johnson (3 min. MP3)

AUDIO: Tom Vilsack (4 min. MP3)

AUDIO: Senators Gillibrand, Thune and Johanns (5 min. MP3)

Big day for dairy policy

The Senate Ag Committee passed their version of the farm bill on Tuesday and it includes the Dairy Security Act and its supply management provision. Now the attention turns to the House where the Ag Committee is scheduled to take up their version Wednesday. Opponents to the DSA have sent letters to House Ag Committee members asking them to reject the DSA and use the Goodlatte-Scott plan instead. They oppose the supply management provision of the DSA saying it would inhibit growth in the diary industry not only for producers but processors.

The National Milk Producers Federation made one last push for the DSA on Tuesday releasing a new report from University of Missouri ag economists Scott Brown and Dan Madison. They assessed how the Dairy Security Act would have affected farm-level economics during the period 2009 through 2012 compared with the impact of an alternative plan offered by Reps. Goodlatte and Scott (G-S). According to Brown and Madison’s economic modeling, the DSA would have increased net farm revenues by $0.55 per cwt. over the period studied, while the Goodlatte-Scott amendment would have raised farm revenue by only $0.48 per cwt. More important from a budgetary standpoint, the Goodlatte-Scott proposal would have hiked government expenditures by $1 billion over the 2009 to 2012 period compared to the DSA, because G-S would encourage more milk production – even at lower margins.

Contrary to claims that the DSA would short the market of milk, affecting both the domestic and export aspects of the U.S. dairy sector, the Missouri report found that “Milk production on average is virtually unchanged under either option.” Brown’s report did note that the DSA’s market stabilization program would slow milk output in response to market signals, but that it would not have been in place frequently enough to produce long-term changes in milk production.

Read the Brown Madison report here:

Dairy continues to slip

The cheese market continues to slip and there was extra pressure on milk futures from last week’s monthly World Agricultural Supply and Demand Estimates which predicted an increase in milk production this year and next year. Cash cheese barrels held steady on the Chicago Mercantile Exchange on Monday but blocks lost another 4.25 cents. The Class III futures declined again with the June contract falling below $18 to $17.76.

Commercial disappearance of dairy products in the U.S. from December through February was 47.4 billion pounds, 0.6 percent below the same period a year ago. Nonfat dry milk disappearance was down 20 percent, fluid milk use declined 2.3 percent, American-type cheese utilization was 1.3 percent lower, other cheese use declined 0.1 percent and butter use increased 3.1 percent compared to a year ago.

It has been raining on the North Island of New Zealand but it has had limited impact on milk production. This is the end of the production year on Oceania when cows are dried-off so the rainfall isn’t going to do much right now. Milk production for the year is tracking below year-ago levels and that is probably where it will end up. Plants are running reduced schedules. Pretty well the same story in Australia. Farmers are feeding supplemental feedstuffs to make up for what the pastures lack.

Corn and spring wheat planting grows in SD

Corn planting in South Dakota took a big jump last week, advancing 30 percentage points as of Sunday, with 37 percent complete…close to the average of 46 percent. It’s still behind last year when 76 percent of the crop was planted.

Spring wheat seeding also advanced 30 percentage points with 76 percent planted.

Soybean planting is six percent complete…10% is normal this time of year. Last year, one-fourth of the soybean crop was in the ground.

The condition of winter wheat remains mostly poor to very poor – 61% of the crop.