Corn and Soybean Markets
Corn markets shot up on April 1 with the latest stock reports. The interesting thing is that the monthly stock estimates in the USDA Feed Outlook that came out on April 12 did not change as the authors said the stocks were what they expected. In any case, May corn is up $1.22/bu. since last month to $7.42/bu. Soybeans rose $0.42 to $13.32/bu. for the May contract. Soybean meal is unchanged from last month. Acreage estimates for planting had 4 million more acres of corn and 0.8 million fewer acres of soybeans. Given high prices for almost every crop, double cropping of soybeans where feasible will certainly be up. Very dry weather in the southwest, which is consistent with the La Niña year, will probably not affect corn and beans too much, but will certainly affect southwest dairying adversely.
Income over feed costs (IOFC)
Penn State’s measure of income over feed costs rose by $1.77/cow/day in March to $9.38/cow/day, up 23% from its February levels. The PA all‐milk price rose by $2.70/cwt., and feed cost fell by 2 cents/cow/day, so the change was entirely due to the higher milk price. Milk prices for the rest of the year are forecast to be about $1.50/cwt. below March levels, and feed prices will remain high, so an IOFC about 5% above 2010 is a rough estimate for the remainder of 2011. Income over feed cost reflects daily gross income less feed costs for an average cow producing 65 pounds of milk. Figure 1 and Table 2 showing the monthly data are appended.
The allocation of the revenue per hundred pounds of milk is shown in Table 3. The milk margin is the estimated amount from the Pennsylvania all milk price that remains after feed costs are paid. As with income over feed cost, this measure shows that March was up from February.
The funding for USDA’s Dairy Gross Margin program is gone for this year, so producers interested in risk management will need to use other methods until the next Federal fiscal year begins in October.
Milk Production & Cow Numbers
The latest milk production data shows March milk production up 2.4% from a year earlier. The data are shown in figure 2. This increase is faster than the population growth, but not a problem as long as exports continue to increase. Milk cows increased by 17,000 from last year and are 76,000 more than last year. Figure 3 shows the seasonal cow numbers for the past four years. Despite more culling in response to high cattle prices, the milk cow herd is increasing, an indication of the higher ratio of heifers to the herd size. This ratio was 49.7% on January 1, up slightly from a year ago, 2% from 2009 and 4% from 2005. Sexed semen allows this behavior. Figure 4 shows the dramatic change in this ratio.
Source: Jim Dunn, Professor of Agricultural Economics, Penn State University