Buckeye Dairy News: Volume 17 Issue 3

  1. Dairy Commodity and Milk Price Outlook

    Dr. Cameron S. Thraen, Associate Professor and OSUE State Dairy Markets and Policy Specialist, Department of Agricultural, Environmental and Development Economics, The Ohio State University

    Items addressed in this article include:

    • Heads-up on Margin Protection Program (MPP) Payments for 2015
    • MPP Margin Forecast for 2015-2016
    • Market Outlook for 2015-2016
    • Personal Note

    Heads-up on Margin Protection Program (MPP) Payments for 2015

    Two key U.S. dairy commodity prices are showing signs of new life; cheese ($1.70+/lb) and butter ($1.95+/lb) are up from recent seasonal lows.  Grade A nonfat dry milk continues to be weak (under $0.90/lb).  The export market remains tepid at best. The U.S. dollar, while retreating somewhat, remains historically high.  Prices in the key grain and feed markets are at four year lows.  Corn remains below $4/bu, soybean meal under $350/ton, and alfalfa hay under $185/ton.  With this constellation of prices, it appears very likely that the USDA/FSA MPP program payments for May-June will be zero or only a few pennies. 

    Using the current (6/02/2015) futures market price data on milk and feed input prices, the USDA Farm Services Agency Decision tool for MPP (http://dairymarkets.org/MPP/Tool/)  shows an anticipated May-June margin of $8.30/cwt.  Anticipated margins for the remaining three calculation periods are: July-August ($9.49/cwt), September-October ($10.41/cwt) and November-December ($10.45/cwt).  This puts the national income over feed cost margin solidly in the upper 1/3 of margins over the 2005 to 2015 period.

    MPP Margin Forecast for 2015-2016

    Looking out into 2016, the USDA/FSA tool shows anticipated margins staying right at $10/cwt for the first half of 2016 and then increasing slightly.  Looking back at the accuracy for this decision tool, I would conclude that given the domestic and international market conditions playing out, this forecast is likely to be a bit optimistic, but only by a small amount.  With this in mind, I would put the chances of the MPP margin falling below $9.25/cwt over the coming 10 months as slim at best.  Keep in mind that the long term average for the MPP margin is just over the $8/cwt mark.

    Market Price Outlook for 2015-2016

    The current Chicago Mercantile Exchange (CME) futures prices for both Class 3 and Class 4 milk show an anticipated increase in price into the last half of 2015.  The Class 3 futures price for the coming six months averages $17.50/cwt and for the following four months into 2016 at $16.80/cwt.  The Class 4 price is expected to increase strongly from the current contract lows, increasing steadily to the $16 to $17.00/cwt range over the coming 12 months.  These prices will help improve the U.S. All Milk Price outlook.  Currently, the U.S. All Milk Price is below the marks set for 2012 to 2014.  With increased strength in the Class 3 and Class 4 prices, the U.S.  All Milk Price should rebound as we move into the last half of 2015.

    Price weakness continues in the international markets as the general macroeconomic woes of the Euro and the possibility of a Greece default in the European Union are being revisited.  This is causing the outlook for continued growth in the U.S. dairy export market to remain weak.  In spite of these events, the export volumes for milk powders, whey, cheese, and lactose have posted positive gains in the first quarter of 2015.  Butter and oil exports from the U.S. remain flat.  Let us hope that the European Central Bank can find a way out of their dilemma yet one more time.

    For up-to-date market and policy information on the Ohio dairy industry, as well as informative charts, research papers on many industry issues, and for useful links to other sites, please visit and bookmark the Dairy Markets and Policy website: http://dairymarkets.org/ to which I contribute.

    On a Personal Note

    After 35 years of service to the Ohio State University, the Department of Agricultural, Environmental, and Development Economics, The Ohio Agricultural Research & Development Center, and The Ohio State University Extension, I will be entering retirement on July 1, 2015.  To all of my many colleagues and friends in the extended Ohio dairy family, I thank you for your interest and support of my work on behalf of the Ohio dairy industry.  You have made my work a joy and pleasure, and I could not ask for more.  My wife and I will remain in Westerville, and we plan to spend even more time enjoying our grandchildren.

  2. Milk Production of Ohio Dairy Herds

    Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    It is always important to monitor the yield of milk and the composition of milk, especially for the individual farmer, because the income of the dairy farm depends on this source of revenue. The yields of protein and fat are the primary determinants of the price received by farmers. The proportions of fat and protein are useful in monitoring cow health and feeding practices within a farm. The income over feed costs (IOFC) and feed costs per hundred of milk are important monitors of costs of milk production.

    The average production of milk, fat, and protein by breed for Ohio dairy herds in 2014 using the Dairy Herd Improvement (DHI; http://www.dhiohio.com) program are provided in Table 1. Not all herds on DHI are included in the table below because of the different testing options offered by DHI, some herds opt for no release of records, lack of sufficient number of test dates, and given that some of the herds consist of other breeds than the ones shown. In comparison, the average of milk yield for all cows (270,000) in Ohio for 2014 was 20,178 lb milk and 775 lb milk fat (3.84%).

    Table 1. Number of herds, milk yield, milk fat, and milk protein by breed for Ohio herds on DHI during 2014.

    Breed

    Number of Herds

    Milk (lb/lactation)

    Milk fat (%)

    Milk protein (%)

    Ayrshire

    10

    17,246

    3.84

    3.24

    Brown Swiss

    18

    20,440

    4.30

    3.44

    Guernsey

    6

    17,312

    4.80

    3.74

    Holstein

    315

    24,552

    3.71

    3.09

    Jersey

    64

    17,171

    4.96

    3.71

    Mixed

    34

    19,666

    4.13

    3.36

     

  3. 2015 Tri-State Dairy Nutrition Conference

    Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    The 2015 Tri-State Dairy Nutrition Conference was very successful with about 515 in attendance and a record number of exhibitors. The pre-conference workshop on feeding management software was well attended, there were 9 undergraduates and 12 graduate students that competed in student presentations, and the pre-conference symposium sponsored by Balchem was well attended. The 2016 Conference to be held April 18-20 which will be the 25th year for the Conference, and Pioneer will be sponsor for the pre-conference symposium on April 19. Mark your calendars for plans to attend an excellent program and to join in on the celebration of 25 years of development. By the way, the web address for the Conference has been changed to: tristatedairy.org; make sure you bookmark this new web address.

  4. North American Intercollegiate Dairy Challenge

    2015 Ohio State Dairy Challenge Team: Brandon Colby, Carter Wallinger, Joey Brown, Kira Andre, and Dr. Maurice Eastridge (coach)

    Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    The Ohio State University participated in the 14th annual North American Intercollegiate Dairy Challenge®(NAIDC) held April 9-11 in Liverpool, NY. In total, 274 students from 38 colleges across the U.S. and Canada attended this educational event. These students are training for careers in the dairy industry as farmers, researchers, educators, financial analysts, nutritionists, farm service providers, and veterinarians. Each contest team received information from an area dairy, including production and farm management data. After an in-person inspection of the dairy, students interviewed the herd owners. Each team developed a farm analysis and recommendations for nutrition, reproduction, milking procedures, animal health, housing and financial management. Ohio State’s team consisted of Kira Andre, Joey Brown, Brandon Colby, and Carter Wallinger (see photo provided below).

    The Dairy Challenge Academy was developed in 2013 to expand this educational and networking event to more college students. Academy student-participants also analyzed and developed recommendations for dairy farms; however, the Academy was organized in mixed-university teams with two advisors to help coach these students.  The Ohio State students who participated in the Dairy Challenge Academy included Devon Bokeno, Cayla Inkrott, Taylor Kruse, Jan Miedema, Sytske Miedema, and Kayla Oxendale.

    Dairy Challenge® is an innovative two-day competition for students representing dairy science programs at North American universities. In its 14-year history, Dairy Challenge has helped train more than 4,700 students through the national contest, Dairy Challenge Academy, and four regional contests conducted annually.

    The North American Intercollegiate Dairy Challenge is supported completely through generous donations by 120 agribusinesses and dairy producers, and programs are coordinated by a volunteer board of directors.  The 2016 National Contest and Academy will be held April 7-9 and will again be held in Liverpool, NY. For more information, visit www.dairychallenge.org or www.facebook.com/DairyChallenge.