DairyProfit Update for May 29, 2012
USDA’s preliminary 2011 milk cost of production (COP) estimates are out, giving dairy policy leaders and others new numbers to digest. As in previous years, production costs across the 23 states analyzed are in a wide range, with regional similarities often difficult to find.
The bottom line: Although the 23-state gross income rose an average of $3.94/cwt. in 2011 compared to 2010, that was more than offset by a $4.69/cwt. increase in total feed costs.
The average total feed costs for all states analyzed was $14.85/cwt. in 2011, compared to $10.16/cwt. in 2010. Total feed costs ranged from a low of $10.64/cwt. in Idaho to highs of nearly $21.00/cwt. in Maine and Oregon (in part due to a higher percentage of organic milk production). On average, purchased feed costs accounted for 75% of the total feed cost increase.
California averaged $17.73/cwt. in total feed costs, about $4.40 more than Wisconsin. Perhaps more amazing, California’s purchased feed costs jumped $6.71/cwt. in 2011, from just $7.04/cwt. in 2010 to $13.75/cwt. in 2011. Wisconsin’s purchased feed costs rose $2.08/cwt., pushing total feed costs up $2.28/cwt.
When compared to gross value of production (including the milk price, cattle sales and other income) on a per hundredweight basis, average 2011 return over operating costs ranged from a high of $10.05/cwt. in Florida and $7.63/cwt. in Idaho, to losses of $1.47/cwt. in Maine, 26¢/cwt. in Kentucky and Tennessee, and 3¢/cwt. in California. The all-state average return after operating costs was $4.00/cwt. in 2011, compared to $4.96/cwt. in 2010.
When allocated overhead costs are added, producers in only two states were in the black in 2011: Idaho, at $4.12/cwt., and Florida, at $1.58/cwt. Losses were highest in Kentucky, Tennessee and Maine. The all-state average was -$3.73/cwt. for 2011, compared to -$2.75 in 2010.
Corn planting is all but done, and corn emergence is well ahead of last year and the 5-year average, according to USDA’s weekly Crop Progress report.
About 96% of U.S. intended corn acreage in 18 major states was planted as of May 20, compared to 75% on the same date last year and 81% for the five-year average. More than 90% of corn planting had been completed in 15 of the 18 major corn-producing states.
About 92% of the planted corn in 18 major states had emerged by May 27, compared to 59% a year ago and the five-year average of 69%. About 72% of the corn crop is reported in good to excellent condition. The 18 surveyed states represent about 92% of U.S. corn acreage.
About 89% of U.S. intended soybean acreage in 18 major states (representing 95% of the U.S. total) was planted as of May 27, compared to 48% on the same date last year and 61% for the five-year average. About 61% of the soybean acreage had emerged, compared to 22% last year and the five-year average of 30%.
The season for determining corn yields is underway
The 2012 U.S. average corn yield will be one of the dominant factors in determining the level of corn prices over the next year. Expectations about that yield have started at a pretty high level, but the critical period for yield determination is really just beginning, according to Darrel Good, University of Illinois ag economist.
A small percentage of the crop planted late this year, and the early condition of the crop, point to the potential for an above-trend yield in 2012, but the most important part of the season is just beginning. The corn market will continue to follow weather developments and crop condition ratings in order to refine yield expectations.
The expected size of the 2012 crop will be impacted by the magnitude of planted and harvested acreage. USDA will provide survey-based estimates in the Acreage report to be released on June 29. New crop corn prices are expected to remain under pressure as long as large crop expectations prevail.
SURE disaster program deadline approaches for 2010 crops
USDA's Farm Service Agency (FSA) reminds producers they have until Friday, June 1, to apply for assistance for 2010 crop losses under the Supplemental Revenue Assistance Payments (SURE) Program. FSA will not act on applications submitted after the deadline. The program provides crop disaster assistance payments to eligible producers on farms that have incurred crop production or quality losses. Sign-up for the SURE program for 2011 crops will be announced at a later date. For more information about USDA Farm Service Agency disaster assistance programs, visit a local FSA county office or http://disaster.fsa.usda.gov/
MARKETS: Barrels, butter higher; Class III mixed
Today's market closing prices:
Cheddar barrels: up 3.0¢, to $1.50/lb.
Cheddar blocks: unchanged at $1.57/lb.
Butter: up 0.5¢, to $1.3925/lb.
Extra Grade nonfat dry milk: unchanged, at $1.09/lb.
Grade A nonfat dry milk: up 0.25¢, to $1.1575/lb.
Class III milk: -34¢ to +24¢ through June 2013. Based on current closing prices, the 2012 average is $15.94/cwt.; 2013 average is $15.90/cwt.
Corn lower; soybeans, meal futures higher
Corn: -4¢ to -16¢/bushel through July 2013. The 2012 average is $5.34/bu.; 2013 average is $5.31/bu.
Soybeans: +4¢ to +6¢/bushel through September 2013. The 2012 average is $13.44/bu.; 2013 average is $12.46/bu.
Soybean meal: +$1.80 to +$4.00 through September 2013. The 2012 average is $386.50/ton; 2013 average is $315.88/ton.