January Iowa-Nebraska dairy budgets improve

January Iowa and Nebraska dairy producer income margins improved, with higher milk protein and cull cow income offsetting higher hay and cottonseed costs, according to Robert Tigner, Extension Educator.

Tigner's analysis provides budgets for tie-stall and freestall operations at two production levels. January total costs (excluding labor and management) for a freestall dairy with a 24,000-lb. herd average declined to $18.02/cwt. The average milk price was $23.42/cwt. The budgeted break-even price for the freestall dairy with a 24,000-lb. rolling herd average (RHA) was $19.71/cwt.

Returns over variable costs were estimated at $7.76/cwt. Total return to management after deducting costs was $3.44/cwt.

Feed prices are not likely to change much in the next couple of months and, with record milk prices, profitability is likely for those same months, Tigner said.

Contact Tigner at robert.tigner@unl.edu.


Dairy consumer, producer price forecasts

USDA’s Economic Research Service forecasts consumer dairy product prices will rise 2.5%-3.5% in 2014, about the same as the anticipated increase for all foods either consumed at or away from home.

The Consumer Price Index (CPI) for food measures the average change over time in the prices paid by urban consumers for a representative market basket of consumer goods and services. Dairy product prices rose just 0.1% in 2013, after increasing 2.1% in 2012. January 2014 dairy product prices rose 0.5% from December 2013, but declined 0.4% compared to January 2013.

ERS also analyzes and models forecasts for the Producer Price Index (PPI), the average change in prices paid to domestic producers for their output. According to latest PPI projections, 2014 farm-level milk prices are expected to rise 0.0% -1.0%, after increasing 7.7% in 2013. Wholesale dairy prices are projected to decline 1.0% to 0.0% in 2014, after increasing 3.5% in 2013.

In 2012, farm-level milk prices declined 8.1%, while wholesale prices dipped 1.7%.


Land O'Lakes reports record annual sales and net earnings

A record-setting year in its Dairy Foods division helped push 2013 sales and net income to record levels for Land O'Lakes, Inc. (LOL).

LOL announced record annual sales of $14.2 billion, up 4.4% from the prior year, and record net earnings of almost $306 million, a 27% increase over the prior year.

LOL’s Dairy Foods division saw a 101% year-over-year growth in pretax earnings. It generated record pretax earnings of $75 million on sales of $4.5 billion, up 8% from 2012. This year's results were driven by improved margins on milk powders and butter in Global Dairy Ingredients, along with records in sales volume and earnings in our Retail Foods and Foodservice businesses, according to LOL president and CEO Chris Policinski.

Overall results for 2013 also included a record return of $147 million to members, representing a 30% increase in patronage compared to 2012. This is the fifth consecutive year cash to members has exceeded $100 million, bringing the seven-year total to more than $750 million.

The complete 2013 annual report and related financial data is available at http://www.landolakesinc.com/investors


Cattle on feed down 3%

Cattle and calves on feed for slaughter market in U.S. feedlots with capacity of 1,000 or more head totaled 10.8 million head on Feb. 1, 3% less than a year earlier. January placements totaled 2.03 million head (1.96 million net), up 9% from a year earlier. January fed cattle marketings totaled 1.79 million, down 5%.

Source: USDA