McFarlanes'



Wisconsin Ag News Headlines
Cropp Looks Back at Record Year for Dairy Producers
Wisconsin Ag Connection - 01/27/2012

Dr. Robert Cropp's monthly Dairy Situation and Outlook report began with a quick synopsis of the kind of year dairy producers had in 2011. Looking back, the Class III milk price averaged $18.37/cwt., (compared to $14.41/cwt. in 2010); the Class IV price averaged $19.04/cwt. (compared to $15.09/cwt. in 2010); and the U.S. all milk price averaged $20.14/cwt. (compared to $16.26/cwt. in 2010). And though these three records are something to boast about, the professor emeritus with the University of Wisconsin-Extension says feed prices were also much higher than normal--which dampened returns over feed costs.

Cropp says total milk production increased just 1.8-percent to 196.2 billion pounds during the past year. However, domestic sales were mixed as fluid milk sales declined for the second year in a row at 1.5-percent.

"A major factor contributing to record milk prices was dairy exports," the report stated. "The period of January through November showed exports of nonfat dry milk/skim milk powder up 15-percent compared to a year ago. Export of total proteins were even; cheese, up 33-percent; butterfat, up 15-percent; and lactose up 14-percent. On a total milk solids basis exports were equivalent to 13.3-percent of U.S. milk production, compared to 12.7-percent in 2010."

As farmers go into the new year, he says forecasts are for lower, but yet favorable, for milk prices in 2012. Cropp notes that the level of milk production, domestic sales and exports will determine the final prices.

"January began with butter, cheese and nonfat dry milk prices all lower than averages for December. The exception has been dry whey prices, which continued to show strength," Cropp points out. "NASS average prices are used to calculate federal order prices. It looks like NASS average prices per pound for January could be near $1.59 for butter, $1.60 for cheese, $1.40 for nonfat dry milk and 68¢ for dry whey."

Despite lower cheese prices, the strong dry whey price will hold the January Class III above $17.00/cwt., to around $17.05/cwt., compared to $18.77/cwt. in December. The Class IV price will be close to what it was in December, at $16.87/cwt.. Cheese and butter prices on the CME continue to weaken, which will push both February Class III and IV below $17.00/cwt.

"But, prices could start to strengthen by March or April, peaking out in October or November, with prices for the year averaging $1.00-$1.50/cwt. lower than 2011," he predicts. "But, this could easily change depending on the actual level of milk production, domestic sales and exports."

As for total production for the year ahead, Cropp says output may increase no more than 1.5-percent--which will be positive for prices. However, USDA's milk production report for the month of December shows milk production was beginning to pick up, rather than slowing down.

Meanwhile, feed prices are still relatively high. He says quality hay supplies are tight and hay prices are up; which result in cow numbers declining for the winter months and slowing down the increase in milk production.

"If cow numbers don't increase for the year, but with some improvement in milk per cow, the increase in milk production for the year could still stay below 1.5-percent which would be positive for milk prices. But, if production increases more than this milk prices will likely not strengthen as much for the second half of the year as now forecasted depending upon domestic sales and exports."

As for butter, Cropp says production has been running well above year-ago levels, with the January through November period up 16.6-percent. December 31 butter stocks were 28.7-percent higher than a year ago, but still 12-percent below the five-year average.


Other Wisconsin Headlines
Hixwood Metal
U.S. Custom Harvesters, Inc.
Copyright © 2024 - Farms.com. All Rights Reserved.