Archive for April, 2011

DBMMC members ask Congress for access to adequate labor

Green Bay, Wisconsin — Over 40% of the employees in agriculture are foreign-born, even during times of high unemployment.  Wisconsin dairy producers need a legal system to employ foreign labor. Such as the system proposed in the Ag Jobs Act of 2009, which would allow dairy farmers to employ foreign labor, similar to what is used in other segments of agriculture for seasonal employees.

Members of the Dairy Business Milk Marketing Cooperative (DBMMC) recently travelled to Washington, D.C. to meet with Congressman Jim Sensenbrenner and his staff.  An important issue to DBMMC members is the access to labor.  Dairy farming can be a 24 hour, seven day a week operation.  Finding employees to keep these labor intense operations running has proven to be difficult.

“The work on a dairy farm can be physically demanding and repetitive.  When I post a job opening in my local paper, I get very few responses, if any,” commented John Pagel, DBMMC President.  ”Dairy farmers need a legal system to bring in foreign labor, much like other segments of the agricultural industry currently have.”

“We made the trip out to Washington DC to alert members of Congress to the problems dairy farmers face back home,” commented Laurie Fischer, Executive Director of DBMMC.  ”Congressman Sensenbrenner and his staff have been very attentive to our concerns.  We look forward to continue to work with him to find a solution to the dairy industry’s labor shortage.”

About DBMMC

The Dairy Business Milk Marketing Cooperative is a testing, verification cooperative within Federal Milk Marketing Order #30.  DBMMC allows members to vote on proposed federal orders and advocates on behalf of its members for the implementation of federal policies that advance the dairy industry.  For more information on DBMMC, visit www.dbmmc.com.

 

Idaho Legislature recognizes importance of dairy

Source: Idaho Dairymen’s Association

Idaho dairy producers working to recover from a national depression in their industry have become a shining example of the economic recovery under way in rural Idaho. The dairy industry’s resiliency has added billions to the state’s economy during a tough recession.

Over the last few weeks the Idaho Legislature showed that they recognized that success, and passed four measures to help guarantee a strong future for the industry.

“The is one of the best legislative sessions the Idaho Dairymen’s Association (IDA)  has ever seen,” Jerome dairy producer and IDA President Mike Roth said. “We are deeply appreciative of how hard these public servants worked to understand our issues and support one of Idaho’s most important industries.”

All four bills passed out of both the House and Senate Agricultural Committees with unanimous support. The three out of the four bills passed the floors of both bodies with an excess of 90% support, and House Bill 270 received a unanimous vote of support from both the House and the Senate. Both Republicans and Democrats supported the measures.

The bills were part of an overall strategy by the Association to make it easier for dairy farmers to succeed in business. Working in close conjunction with key legislative leaders and representatives from supporting organizations, the Dairymen’s Association crafted four measures to support the industry:

  • The pay price received by milk producers is driven in part by labs that test the components of milk. Those labs will be under closer scrutiny with the passage of House Bill 152. The bill will put into place a negotiated rule-making process at the Idaho State Department of Agriculture so that both producers and processors will determine the most effective and fair way to monitor the labs’ performances. This corrects a flaw dating back to 2004, when state dairy producers lost their seat at the oversight table with the repeal of the Federal Milk Marketing Order.
  • Crucial business information will remain private thanks to House Bill 269, which clarifies how information currently on file with the Idaho Department of Agriculture can be deemed “trade secrets.” The states required Nutrient Management Plans and information derived by the producer because of the plan will no longer be available to the public.
  • There will be more certainty in the crafting and implementation of rules governing the industry thanks to House Bill 270. The measure clarifies how the state Department of Agriculture can – and cannot – regulate the industry when federal rules are less stringent than those proposed by state or local agencies. Most importantly it sets a high standard in requiring the use of peer-reviewed science in the development of the rules.
  • Groups and individuals will no longer be able to harass the state and the industry thanks to House Bill 328. The closes a loophole in existing public records law, which allows anti-dairy activists to force the disclosure of thousands of pages of information without the state being able to seek reimbursement for significant labor costs associated with fulfilling the request.

“The Idaho Dairymen’s Association is fortunate to have such strong allies in the Idaho Legislature,” Executive Director Bob Naerebout said. “We are pleased that they took the time to understand our issues, recognized the critical role our members play in boosting the state’s economy, and were so willing to support these four important pieces of legislation.”

 

DairyProfit Tuesday, April 5, 2011

An (almost) daily recap of dairy information: April 5, 2011

Dr. Roy Ax dies suddenly

Dr. Roy Ax, Professor of Animal Sciences and Adjunct Professor of Obstetrics and Gynecology at the University of Arizona, died suddenly the evening of March 29, 2011.
Dr. Ax was an internationally recognized expert in domestic animal reproduction.  At the University of Arizona, he served as Chairman for the Department of Animal Sciences from 1990-2001 and was recognized for his teaching with the Bart Cardon Sustained Excellence in Teaching Award in 2010.

Retail milk prices

According to the American Farm Bureau Federation’s quarterly Marketbasket Survey, shoppers in 29 states reported paying the following average prices for milk in half-gallon containers in the first quarter of 2011:
• regular milk: $2.25, up 1¢ from the prior quarter, but unchanged from the same quarter a year earlier. (The average price for one gallon of regular whole milk in the first quarter of 2011 was $3.46, up 11¢ from the previous quarter and up 3% compared to a year earlier.)
“rbST-free” milk: $3.23 (about 40% higher than a half-gallon of regular milk), up 13¢ from the previous quarter, but about 10% less than the first quarter of 2010.
• organic milk: $3.70 (about 60% higher than regular milk), up 10¢ compared to the prior quarter and about 1% more than the first quarter of 2010.

MARKETSBarrels slip some more

Closing on Tuesday, April 5:
Cheddar barrels: down 3.0¢, to $1.5225/lb.
Cheddar blocks: unchanged, at $1.5775/lb.
Butter: unchanged, at $1.97/lb.
Extra Grade nonfat dry milk: unchanged, at $1.80/lb.
Grade A nonfat dry milk: down 1.0¢, to $1.67/lb.
Class III milk futures: mixed in a narrow range, -6¢ to +9¢/cwt. through September 2012.
Corn futures: -0.4¢ to +6.4¢/bushel through September 2012.
Soybean futures: -10.6¢ to -5.2¢/bushel through September 2012.
Soybean meal futures: -$3.80 to -2.10/ton through September 2012.

DAIRYLINE RADIO

Wednesday: IDFA

In Wednesday’s DairyLine “Processor’s Perspective” broadcast, International Dairy Foods Association’s Peggy Armstrong discusses the U.S. Environmental Protection Agency’s testing for radiation in milk, fallout from the nuclear reactor problems in Japan. Tests have indicated “miniscule levels” of radiation in fluid milk, which FDA and EPA say do not pose a health concern. To read the DairyLine broadcast comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”

EASTERN DAIRYBUSINESS

Conversations: Ask your nutritionist about silage quality & hygiene

Having to throw away spoiled silage can be tough: The losses involved are right there to be seen, almost like dollar bills being pitched. Feeding spoiled silage can have more serious consequences, including decreased intakes, reproduction problems and reduced production, leading to bigger losses. As producers and their advisors meet in the conference room (or across the kitchen table), silage quality and hygiene should be subjects of conversation, advises Lallemand Animal Nutrition’s Renato Schmidt, Ph.D. and Bob Charley, Ph.D.

INDUSTRY NEWS:

Merial adds training module to ‘Best in Class Dairy’ website

Merial’s Best in Class Dairy website, www.BestInClassDairies.com, features a milker training module as part of a new comprehensive educational initiative. The Web-based audiovisual training module, which addresses pre- and post-milking procedures, is the first in a series offered to dairy operation workers. All materials will be available in both English and Spanish.
Check for daily DPW news updates at www.dairybusiness.com.
For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.
Dave Natzke, Editor

Dr. Roy Ax dies suddenly

Dr. Roy Ax, Professor of Animal Sciences and Adjunct Professor of Obstetrics and Gynecology at the University of Arizona, died suddenly the evening of March 29, 2011.

Dr. Ax was an internationally recognized expert in domestic animal reproduction.  At the University of Arizona, Dr. Ax served as Chairman for the Department of Animal Sciences from 1990-2001 and was recognized for his teaching with the Bart Cardon Sustained Excellence in Teaching Award in 2010.

Prior to his position at the University of Arizona, he rose through the ranks, at the University of Wisconsin-Madison, in the Department of Dairy Science, from Assistant (1979-1983) to Associate (1983-1987) to Professor (1987-1990).  There he served as Director of the renowned Endocrinology-Reproductive Physiology Graduate Training Program, and was also acknowledged for his teaching with the John S. Donald Excellence in Teaching Award in 1983.

Dr. Ax received his B.S., M.S. and Ph.D. degrees from the University of Illinois and was a postdoctoral fellow with The Mayo Clinic.  In his career, he trained 24 M.S., 8 PhD and 7 Postdoctoral students. He held 11 patents related to fertility of mammals and genetic merit of cattle.

Dr. Ax authored or coauthored more than 100 refereed papers, wrote more than 150 invited papers and symposia proceedings, published 18 book chapters and presented over 100 abstracts at scientific meetings. In his career, Dr. Ax generated almost $7 million to support his research program. He had received numerous research awards including the Young Scientist Award, American Dairy Science Association, 1985, National Association of Animal Breeders Research Award, 1989, Upjohn Physiology Award, 1990, Alumni Award of Merit, University of Illinois, 1991, and the University of Arizona College of Agriculture and Life Sciences Award for Excellence, 2001.

Dr. Ax also served on the editorial board for dozens of scientific journals and chaired national grant review panel committees and also served as Scientific Director at TMI Laboratories International, a Tucson research company specializing in reproductive technologies.  A memorial service is planned for Saturday, April 30, 1-3 p.m. in the Social Sciences Building, Room 100.

 

People Power: Strategy in turbulent times

By Robert Milligan

Three years ago, none of us could have imagined what would transpire in our dairy and agricultural industry, or in the general economy. I have been referring to this as TURBULENCE X TURBULENCE.

Since there is no indication either the dairy or general economy will return to anything approaching stability, it’s important we consider whether these changes mean we should view strategy differently. I think the answer is “yes.”

Some experts say we are in a “new normal”  characterized by three words: uncertainty, volatility and risk. I would argue the “new normal” is that there is no normal. Based on  current turbulence and the increasing diverse factors facing every dairy business, it is absolutely essential each business develop its own unique strategy.

Uncertainty, risk and volatility: These three words are too much alike and paint far too negative an image of the future. They have very different statistical properties, but refer to a similar idea.

Think about the three words you would use to describe our turbulent future. The three words I choose are: Change, urgency and opportunity. My suggested approach to developing strategy using those words in turbulent times is captured in this formula:

Embrace Change + True Urgency = Opportunity.

 

Embrace change

Our tendency is to think change is something we respond to. That view of change is a reactive response. To thrive in turbulent times, we must view change more proactively –  embrace it.

The proactive view of change should be applied both to how we view change external to our dairy business; and to change internal to our business.

The surprising conclusion of those who research change is we, as human beings, have only two patterns for response to change:

1) We perceive the change to be a loss.

2) We view the change as an opportunity.


Without going into detail about the patterns, we can easily conclude, whether as owners or employees, perceiving change as opportunity is preferred.

As business leaders, we are the ones to set the tone for everyone in our business. If we embrace change and believe it will create business opportunities, our partners and employees will be much more likely to view changes we introduce as opportunities.

What then, besides setting an example, can we do to increase the likelihood others will view the changes we initiate as opportunity:

• Involvement: The more we are involved in planning the change, the more likely it will be viewed as opportunity. Do not spring change on your employees. At minimum, provide them with a preview by seeking their ideas for improving your plans prior to finalizing everything.

• Control: The more we view that we are in control of our responsibilities and success, the more likely we will view change as opportunity. Be certain everyone understands why the change is important, and that they will be provided the training, support and coaching needed to succeed after the change.

 

True Urgency

John Kotter, world renowned change expert, argues (in an insightful book titled A Sense of Urgency) that successful change starts with a sense of urgency. The problem is most businesses facing financial pressure have either complacency or a false sense of urgency.

True urgency, both in Dr. Kotter’s and my experience, is rare, but feasible. Review the signs of complacency, false urgency and true urgency in the table below.

Dairy businesses wishing to develop a true urgency culture must first clearly identify what is important – mission, values, strategies, objectives and goals – and then focus on them every minute of every day. The phrase “relentlessly purging the irrelevant” has resonated with managers learning about strategy in turbulent times.

Two ways to quickly begin moving toward true urgency are: 1) show urgency yourself by focusing everything on the important; and 2) lead by example by always setting and meeting deadlines and commitments.

Remember: Embrace Change + True Urgency = Opportunity.

FYI

Robert Milligan, senior consultant with Dairy Strategies LLC, can be reached via phone: 651-647-0495; e-mail: rmilligan@trsmith.com, or website: www.dairystrategies.com.

 

Review the signs of complacency, false urgency and true urgency

CSI Dairy: Two mysteries of butterfat depression

Numerous ‘culprits’ exist on dairy farms, robbing herd performance and injuring the dairy’s bottom line. Identifying and arresting the  offender isn’t always easy, and  often requires a full investigation, gathering and analyzing evidence on the farm and in the lab. In this mystery, two investigations into  unexplained butterfat depression reveal a common offender.

By Drs. Brian Perkins and Dave Ohman

The experienced dairyman’s voice rang with concern. His Holsteins were no longer producing 80-85 lbs. of milk per cow per day with 3.4%-3.5% butterfat. When butterfat dropped to 3.0% in midwinter, he increased the straw fed and decreased corn. Unfortunately, milk production dropped.

Background

The ration contained 37% high-starch corn silage, double the normal level due to haylage constraints. With high-moisture shelled corn (HMSC) as the main grain source, the ration’s starch content totaled 26%-28%. Potential off-farm feed sources – hay or finely ground dry corn – had not been considered due to cash flow limitations.

 

Investigation

An evaluation of risk factors related to the diet, cows and management included testing the total mixed ration (TMR) for neutral detergent fiber (NDF) and starch degradability analysis. The lab results provided a clue: The two-hour starch degradability was a startling 83%.

Solution

To reduce the ration’s starch degradability, HMSC was replaced with dry ground corn. The haylage level was increased and straw was reduced. BF increased about 0.25% and milk production increased by several pounds. The reduced starch degradability improved rumen function.

In a second situation, a Western dairyman was puzzled over why persistent low BF dogged his herd on a high-hay diet. An evaluation of the risk factors offered no easy clues.

Then results of the HMSC seven-hour starch degradability analysis provided a surprise: 76% degradability, several points higher than average for HMSC. Rumen acidosis and upsets as the offenders were likely depressing butterfat.

Not long afterwards, the dairy’s first HMSC supply ran out. It switched to a second source. Lab tests were repeated, but with different results: 70% starch degradability and some relief from acidosis.

Simultaneously, two feed byproducts were pulled that had provided small amounts of unsaturated fatty acids to the rumen; BF increased by 0.2%. A potential lead? We asked the lab to run a milk fatty acid analysis.

The test proved revealing. The ration itself had been affecting the rumen biohydrogination pathways that rumen bacteria use to begin detoxification of dietary fats. The level of “trans” fatty acids most active at depressing BF was many times higher than normal.

In addition, the analysis indicated a combination of too much unsaturated fatty acid (vegetable oils) and borderline acidosis. A milk sample taken following the ration changes indicated normal fatty acid levels.

Lab tests

Three tests help evaluate the role of dietary starch availability on rumen function:

• Ruminal starch digestibility analysis. The seven-hour ruminal starch digestibility analysis evaluates the rate of starch degradation in corn, corn silage or the TMR. It is readily available at many forage labs. As the rate of digestibility for a corn starch increases, more starch is digested in the rumen, with less digested in the intestines. Having too much or too rapid ruminal starch digestion increases the risk of sub-acute as well as acute ruminal acidosis.

• Protein solubility also closely correlates to starch availability and can be used to monitor changes in starch availability in HMSC and corn silages.

• Gas production. New and interesting technology uses gas production to understand the digestion rates of both starch and fiber. Compelling information can be gained when troubleshooting milk production and component issues.

Remember, if BF depression strikes, your forage labs have important analysis tools.

 

FYI

Brian Perkins, Ph.D., Dipl ACAN, Dairy Technical Service Specialist for Diamond V, serves producers in the Pacific Northwest. He can be reached via e-mail: BPerkins@diamondv.com.

Dave Ohman, DVM, Dairy Technical Service Specialist for Diamond V, serves the Central U.S. He can be reached via e-mail: DOhman@diamondv.com.

•  To register for the Diamond V Nutrition Line Newsletter, email your request to NutritionLine@DiamondV.com.

 

Conversations: Ask your nutritionist about silage quality and hygiene

Having to throw away spoiled silage can be tough: The losses involved are right there to be seen, almost like dollar bills being pitched. Feeding spoiled silage can have more serious consequences, including decreased intakes, reproduction problems and reduced production, leading to bigger losses. As producers and their advisors meet in the conference room (or across the kitchen table), silage quality and hygiene should be subjects of conversation.

By Renato Schmidt, Ph.D. and Bob Charley, Ph.D.

Making top quality silages means starting with high-quality forage crops in the field. The ensiling process then relies on efficient conversion of sugars to acids – mainly lactic acid – under anaerobic conditions, to produce a stable, acidic material. Acids are produced by lactic acid bacteria either naturally coming from the field or added as microbial inoculants, to ensure a dominant population of efficient, effective bacteria. There are a number of microbes that can otherwise dominate, potentially causing significant spoilage.

Bob Charley

Below are a few questions to help focus on and understand potential issues, specifically with clostridia and yeasts in silages.

 

1) What issues can clostridia cause in silages?

Clostridia are in soils and manure, and can contaminate crops in the field. In silage, they grow anaerobically and can ferment sugars and lactic acid to butyric acid and degrade proteins to produce biogenic amines and ammonia. The end result of a clostridial silage fermentation is a foul-smelling silage that is difficult to feed and can cause health and reproductive issues. In addition, some clostridia can carry through into the milk and even cause problems in cheese making.

Ask your nutritionist about how to avoid getting silages spoiled by clostridial growth to help minimize production, health and reproduction issues in your herd.

 

Renato Schmidt

 

 

2) If clostridia are anaerobic, why do they sometimes occur in aerobically unstable silages?

Air penetrates the silage mass during feedout and is utilized by aerobic bugs, e.g. yeasts, that can grow on sugars and lactic acid in silage. The consumption of oxygen in these niche spots can subsequently restore anaerobic conditions that, along with increased pH due to lactic acid consumption by the yeasts, allows clostridia to become active and grow.

Discuss how to prevent aerobic growth of yeasts during feedout, and how to manage your silages to minimize aerobic spoilage.

 

3) What causes aerobic spoilage?

Yeasts that grow on sugars and/ or lactic acid are the initiators of virtually all heating (aerobic spoilage) events in silages. In the presence of air (oxygen), yeasts grow, generating heat, causing significant energy losses and consuming lactic acid, raising silage pH. This allows opportunistic microbes (bacilli, molds, listeria, clostridia) to become active and grow, consuming nutrients, generating more heat and potentially producing toxins. Preventing yeast growth is key to minimizing spoilage, maximizing the quality, and quantity, of silages available to feed.

Review your records to see if you have a history of heating events, especially in crops prone to aerobic spoilage (eg. corn, HMC).

4) What can be done to inhibit or reduce the growth of yeasts?

Make sure the crop is ensiled at the recommended stage of maturity, DM content and chop length. Utilize an approved inoculant to improve aerobic stability. Pack all silages and HMC crops tight to squeeze out trapped air, cover and seal as soon as each silo is filled. During storage, monitor condition of the cover and patch holes as necessary as soon as possible.

Review good silage management practices and set realistically achievable goals for key parameters (DM, chop length, packing density, etc.).

 

5) What can you do if you can’t afford to dispose of silage that did not ferment well?

Feeding spoiled silage needs to be managed very carefully. Moldy or obviously spoiled patches should be pitched out. If the whole silage mass did not ferment properly, dilute with other feedstuffs and/or consider specific components/additives that may help. Silages with a high level of butyric acid should not be fed to pregnant or transition cows, and feeding to other milking cows should be managed so that butyric acid intake is no higher than 50 grams per head on a daily basis.

Work with your nutritionist to correctly sample your feeds to obtain accurate test results to help manage any issues and find the specific cause of the problem.

 

FYI

Renato Schmidt (left), Ph.D., is Forage Products Specialist with Lallemand Animal Nutrition. Contact him via e-mail: rschmidt@lallemand.com or phone: 402-850-8089.

Bob Charley, Ph.D., is Forage Products Manager with Lallemand Animal Nutrition. Contact him via e-mail: bcharley@lallemand.com or phone: 414-336-9549

For more information, visit www.Biotal.com.

 

DairyProfit Monday, April 4, 2011

An (almost) daily recap of dairy information: April 4, 2011

 

February dairy products

USDA’s Dairy Products report estimated February 2011 butter production at 150.1 million lbs., down 9.8% from January 2011, but 6.4% more than February 2010.

Total cheese output was estimated at 807.1 million lbs., down 9% from January, but 4.1% more than a year ago.

Total Italian type cheese, at 352.2 million lbs., was down 9.3% from February, but up 6.6% from a year ago. Mozzarella cheese output totaled 274.2 million lbs., down 11% from January, but  5.8% more than a year earlier.

American type cheese production was estimated at 328.8 million lbs., down 8.5% from January, but 2.6% more than a year ago. Cheddar production totaled 242.9 million lbs., down 11.6% from January and 0.6% less than February 2010.

Nonfat dry milk output, at 109.6 million lbs., was down 6.4% from January 2011 and 6.9% less than a year ago.

 

Focus will remain on corn demand

USDA’s March 1 Grain Stocks report revealed a surprisingly small inventory of corn.  The smaller-than-expected inventory implies consumption during the second quarter of the 2010-11 marketing year progressed at a rate that cannot be sustained by available supplies, according to University of Illinois ag economist Darrel Good.

 

MARKETS: Cheese continues spring slide

Closing on Monday, April 4:

Cheddar barrels: down 2.0¢, to $1.5525/lb.

Cheddar blocks: down 1.75¢, to $1.5775/lb.

Butter: down 2.0¢, to $1.97/lb.

Extra Grade nonfat dry milk: unchanged, at $1.80/lb.

Grade A nonfat dry milk: down 2.0¢, to $1.68/lb.

Class III milk futures: -38¢ to -3¢/cwt. through January 2012.

Corn futures: +8.0¢ to +24.4¢/bushel through September 2012.

Soybean futures: -9.6¢ to +1.0¢/bushel through September 2012.

Soybean meal futures: -$4.00 to +1.70/ton through September 2012.

 

DAIRYLINE RADIO

Tuesday: Gould market review

In Tuesday’s DairyLine broadcast, University of Wisconsin-Madison dairy economist Dr. Brian Gould said the current slide in cheese prices was anticipated, but he was hesitant to predict how low it will go. Looking at the futures prices on Class III milk, butter and dry whey, Gould said “either the cheese value has to come up or those futures have to come down, because there seems to be a disconnect of about 10¢ or 15¢ over the near term over what the current cash market is.” Gould also said he was surprised butter prices were dropping, given that stocks are fairly low. To read the DairyLine broadcast comments, visit www.dairyline.com under “Today’s Dairy News.” Or, listen to the conversation with DairyLine’s Lee Mielke by clicking on “DairyLine Daily Broadcast.”


EASTERN DAIRYBUSINESS

Roundup Ready alfalfa: Where does it fit in eastern management?

It’s common to use cool-season grasses to establish a new alfalfa stand in the East. According to Ev Thomas, that requires different management strategies when incorporating Roundup Ready alfalfa in your forage rotation.

 

INDUSTRY NEWS: Business News: People

Staff changes, award winners and other newsmakers

Check for daily DPW news updates at www.dairybusiness.com.

For a sample copy of Dairy Profit Weekly, or subscription information, visit www.dairyprofit.com or phone: 800-334-1904, ext. 244.

Dave Natzke, Editor

 

 

 

Focus will remain on corn demand

By Darrel Good
Agricultural Economist
University of Illinois

USDA’s March 1 Grain Stocks report revealed a surprisingly small inventory of corn.  The smaller than expected inventory implies consumption during the second quarter of the 2010-11 marketing year was larger than expected.  It appears that consumption is progressing at a rate that cannot be sustained by available supplies.

At 6.523 billion bushels, the estimate of March 1 inventories was 1.171 billion bushels smaller than stocks of a year earlier and 165 to 170 million bushels smaller than the average trade guess.  The ease of originating grain from producers at generally normal basis levels had led some to believe that March 1 stocks would be much larger.  The report revealed that on-farm stocks were 1.164 billion bushels smaller than those of a year earlier.  Off-farm stocks were only 7 million bushels smaller.  Producers have moved larger quantities of corn to market than was the case last year in response to higher prices, not a stronger basis.  It should be pointed out that the estimate of off-farm stocks is based on a near census of commercial facilities while the on-farm stocks estimate reflects a sample of producers and is therefore subject to sampling error.

Where did the corn go?  Total consumption of corn during the second quarter of the year totaled 3.538 billion bushels, 328 million more than consumed a year ago.   USDA has not yet released estimates of use by category during the second quarter of the year.  Based on our preliminary calculations, exports during the quarter were 18 million bushels less than during the second quarter last year.  Processing uses were up 167 million bushels, and by calculation, feed and residual use was up 179 million bushels.  It appears that feed and residual use of corn during the first half of the marketing year totaled 3.606 billion bushels, nearly 7% more than during the first half of the previous year.  For the year, USDA has projected a year-over-year increase of only 1.2%.

The amount of corn available for consumption during the last half of the year depends on the magnitude of the minimum level of year ending stocks.  USDA currently forecasts those stocks at 675 million bushels, or 5 percent of expected consumption.  Historically, stocks have not been lower than 5 percent of use.  If stocks can be reduced to 4.5 percent of use, then the minimum carryover level is 610 million.  A 4 percent stocks-to-use ratio would allow year ending stocks to be reduced to 550 million bushels.  It appears that use during the last half of the year will be limited to about 5.95 billion bushels.  That is, following an 8% year-over-year increase in the first half of the year, use during the last half of the year needs to be about 1% less than use of a year earlier.

During March, the first month of the last half of the marketing year, ethanol production was 6 percent larger than in March of 2010.  Current ethanol blending margins and ethanol production margins point to a continued high rate of ethanol production.  Corn exports during March were about 10 million bushels less than exports a year earlier, but new export sales during March were 70 million larger than in March 2010.  The number of cattle in feed lots on March 1 was 5% larger than inventories of a year ago.  The number of milk cows on farms in February was 1% larger than a year earlier and the March 1 inventory of market hogs was 1% larger than the inventory of a year earlier.  A slowdown in feed use does not appear imminent.

While the rate of corn use does not appear to be slowing, a slowdown is required.  The upcoming wheat harvest may provide an opportunity for livestock producers to substitute more wheat for corn in the livestock ration.  The degree of substitution will depend on the size and quality of the 2011 wheat harvest and the resulting relative prices of corn and wheat.  Currently, corn and wheat prices in southern Illinois are about equal, but new crop wheat prices are about $.15 higher.  Importers may also look to the newly harvested South American corn crop for a larger share of imports over the next 5 months.

Corn prices have increased about 90¢/bushel since the release of the March 1 corn stocks estimate.  Prices are at the highest level of the year and spot cash prices have exceeded the previous high reached in June 2008.  Further price increases may be forthcoming unless there is some evidence that the rate of consumption has slowed.

 

February Dairy Products report

USDA’s Dairy Products report estimated February 2011 butter production at 150.1 million lbs., down 9.8% from January 2011, but 6.4% more than February 2010.

Total cheese output was estimated at 807.1 million lbs., down 9% from January, but 4.1% more than a year ago.

Total Italian type cheese, at 352.2 million lbs., was down 9.3% from February, but up 6.6% from a year ago. Mozzarella cheese output totaled 274.2 million lbs., down 11% from January, but  5.8% more than a year earlier.

American type cheese production was estimated at 328.8 million lbs., down 8.5% from January, but 2.6% more than a year ago. Cheddar production totaled 242.9 million lbs., down 11.6% from January and 0.6% less than February 2010.

Nonfat dry milk output, at 109.6 million lbs., was down 6.4% from January 2011 and 6.9% less than a year ago.

 

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