Milk, Feed Prices Moving Higher
Published: Friday, February 11, 2022
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
A higher December All-Milk Price offset higher corn, soybean and hay prices to nudge the December milk-feed ratio higher for the fourth month in a row. The USDA's latest Ag Prices report has the ratio at 1.98, up from 1.94 in November, but well below last year's 2.17.
The index is based on the current milk price in relationship to feed prices for a ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk would purchase 1.98 pounds of dairy feed of that blend.
The U.S. All-Milk Price averaged $21.80 per hundredweight, up $1 from November and $3.50 above December 2020.
The December national average corn price added another 20 cents, jumping to $5.47 per bushel and is $1.50 per bushel above December 2020.
Soybeans averaged $12.50 per bushel, up another 30 cents from November and $1.90 per bushel above December 2020.
Alfalfa hay averaged $213 per ton, up $3 from November and $47 per ton above a year ago.
Looking at the cow side of the ledger, the December cull price for beef and dairy combined averaged $69.10 per hundredweight, down a dime from November, $11 above December 2020 but is $2.50 below the 2011 base average of $71.60 per hundredweight.
Dairy economist Bill Brooks, of Stoneheart Consulting in Dearborn, Mo., stated in the Feb. 7 "Dairy Radio Now" broadcast there will be no Dairy Margin Coverage payment for December, ending 12 straight months. FSA announced the December 2021 milk margin above feed costs at $9.53 per hundredweight, he said, up 39 cents from November, 99 cents above December 2020, and just 3 cents above the maximum coverage. "This is the first time since November 2020 that producers with coverage at $9.50 per hundredweight, will not receive a payment on eligible production," according to Brooks.
Based on his Feb. 2 estimates, Brooks does not see a payment the rest of 2022, adding the caveat that markets have a tendency to change quickly so the program is still one that producers need to consider and make sure they're active in. He said the 2022 fundamentals look like there will be a small cushion between the rising costs producers are seeing but more than likely, it won't be enough for some producers, as rising interest rates on operating loans come into play.
He doesn't see a big incentive for producers to add cows however he concluded, "At any level, somebody is making money milking cows and somebody's losing money, so there probably will be some producers who will add cows but in general, if they do, it's probably not going to have a massive impact on increasing our herd size here this year."
In the week ending Jan. 22, 62,500 dairy cows were sent to slaughter, up 400 from the previous week, but 5,400 head, or 7.95 percent, below a year ago.
The Consortium for Common Food Names requested that the U.S. government "further its efforts to proactively secure 'firm and explicit commitments' from trading partners to preserve the rights of common name users and strongly combat the EU's misuse of geographical indications (GIs) to monopolize generic food and beverage terms."
The request comes in comments filed this week by CCFN with the U.S. Trade Representative as part of the agency's annual Special 301 Report on Intellectual Property Protections comment process. More than 160 Members of Congress have already called on USTR to take similar steps.
"The EU's deliberate campaign of misusing the GI system to confiscate common food and beverage names is nothing more than a thinly veiled attempt to stifle legitimate competition and cut American producers out of the EU and third country markets," said Jaime Castaneda, CCFN executive director.
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