Key Milk Price Index Moves Higher
Published: Friday, December 6, 2019
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
A higher All-Milk price pushed the October milk feed price ratio a little higher, the fourth consecutive month of gain. The USDA's latest Ag Prices report put the ratio at 2.39, up from 2.33 in September and compares to 2.22 in October 2018.
The index is based on the current milk price in relationship to feed prices for a dairy ration consisting of 51 percent corn, 8 percent soybeans and 41 percent alfalfa hay. In other words, one pound of milk today purchases 2.39 pounds of dairy feed containing that blend.
The U.S. All-Milk price averaged $19.90 per hundredweight, up 60 cents from September and $2.40 above October 2018. California's All-Milk price was $18.90, up 30 cents from September and $1.86 above a year ago. Wisconsin's, at $20.50, was up 60 cents from September and $2.70 above a year ago.
The national average corn price averaged $3.84 per bushel, up 4 cents from September and 42 cents per bushel higher than October 2018. Soybeans averaged $8.60 per bushel, up 25 cents from September and a penny per bushel above a year ago. Alfalfa hay averaged $179 per ton, down $2 from September but $3 per ton above a year ago.
Looking at the cow side of the ledger, the October cull price for beef and dairy combined averaged $60.90 per hundredweight, down $4.70 from September, $3.10 above October 2018, but $10.70 below the 2011 base average of $71.60 per hundredweight.
FC Stone made an interesting observation on slaughter data in its Nov. 25 Early Morning Update, stating; "Slaughter was down .7 percent from last year in October. We don't know exactly how many cows were imported for slaughter in October, but it was likely down from last year, so we're calling slaughter of domestic cows was likely about flat compared to year ago. The slaughter data would suggest that the herd should have fallen in October, yet the Milk Production report says it grew 5,000 head. Maybe there are more heifers out there than the USDA estimated," suggests FC Stone.
In politics, the National Milk Producers Federation says the recent Dean Foods bankruptcy underscores the importance of cooperatives. An NMPF press release stated, "Cooperatives have played a crucial role in protecting their members' economic interests for more than a century. As the industry deals with the uncertainty surrounding what the processing landscape will look like post-Dean Foods, hundreds of dairy farmers have no doubt been wondering what ultimately will happen to their milk as the bankruptcy sorts itself out."
"Some cooperative members might be among those wondering, but their membership in a co-op can help provide more certain answers," said NMPF. "Finding markets for milk is what cooperatives do, 365 days a year, regardless of disruptions that may develop. With the strength of the co-op backing them up, farmers know they have expertise and networks they can rely upon to help handle the unexpected. Even in temporary situations when milk deliveries exceed processing capacity, co-op members still have steady, predictable access to markets for their milk. When processors struggle, co-ops help protect farmers and consumers," said NMPF.
Mark your calendar for Jan. 26-29 for the International Dairy Food Assn's. annual Dairy Forum in Scottsdale, Ariz.
The IDFA calls it "the premier event for dairy food executives to connect with other industry leaders, advance their knowledge, and to discover new perspectives on issues that are important to our industry."
More than 1,000 dairy leaders are expected to convene under the theme the "Power of Dairy." Details are posted at the IDFA website.
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