Digest Highlights

USDA milk production forecast steady, price outlook improves

The USDA’s World Ag Supply and Demand Estimates (WASDE) report left milk production forecasts unchanged from last month but raised projected milk prices for 2022. Meanwhile, multiple crop reports point to smaller forage supplies.

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Released on Jan. 12, the WASDE report estimated 2021 milk production at 226.2 billion pounds, unchanged from last month’s estimate and up about 1.1% from 2020.

Looking into 2022, milk production was forecast at 227.7 billion pounds, unchanged from last month’s forecast. If realized, 2022 production would be up less than 0.7% from the 2021 forecast.

Estimated 2021 average cheese and butter prices were raised last month, while prices for cheese, butter, nonfat dry milk and dry whey are all expected to rise in 2022.

The 2021 Class III price was estimated at $17.05 per hundredweight (cwt), down $1.11 from the 2020 average. The Class IV price was estimated at $16.09 per cwt, $2.60 more than a year ago. The 2021 all milk price estimate was raised to $18.65 per cwt, up 41 cents from 2020.

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For 2022, the projected Class III milk price was raised $1.50 from last month’s estimate to $19.65 per cwt. The projected annual average Class IV price was raised $1.90 to $20.90 per cwt. The projected all milk price for 2022 was raised to $22.60 per cwt, up $1.85 from last month’s forecast.

Beef price outlook raised: The 2021 beef production estimate ws raised on higher non-fed cattle slaughter and heavier average carcass weights. For 2022, production estimates were raised due to higher-than-expected placements in late 2021 and slightly heavier carcass weights and greater non-fed cattle slaughter in the first half of the year. The USDA will release its semiannual Cattle report on Jan. 31, providing estimates of heifers held for breeding and an insight into the number of feeder cattle available for placement during 2022. Estimated 2021 annual average prices for fed cattle were unchanged at about $122.50 per cwt. The price outlook for 2022 was raised $2 from last month to $137 per cwt.

Feedstuff outlook mixed: In addition to WASDE supply and demand estimates, feed supply and cost projections, the USDA also released monthly and annual Crop Production reports and a quarterly Grain Stocks report, all on Jan. 12. Here’s a summary:

  • Corn: This month’s 2021-22 U.S. corn outlook is for higher production, greater use, lower exports and larger ending stocks. Corn production was estimated at 15.115 billion bushels, up 7% from 2020. The average yield was estimated at a record high 177 bushels per acre, up 5.6 bushels from the year before, with yields up across most of the eastern Corn Belt, Northeast and Southeast. Area harvested for grain was estimated at 85.4 million acres, up 4% from 2020. At $5.45 per bushel, the projected season-average corn price received by producers was unchanged from last month. That would be about 92 cents (20%) more than 2020-21 average of $4.53 per bushel and $1.89 (53%) more than the 2019-20 average of $3.56 per bushel.

  • Soybeans: The 2021-22 U.S. soybean supply and use outlook projected an increase in ending stocks but higher prices. 2021 production was estimated at a record 4.44 billion bushels, up 5% from 2020. Soybean growers harvested 86.3 million acres, up 5% from 2020, with the average yield estimated at 51.4 bushels per acre, up 0.4 bushel. The U.S. season-average soybean price for 2021-22 is forecast at $12.60 per bushel, up 50 cents from las month and $1.80 more than the average for 2020-21, reflecting tighter global stocks and lower production forecasts for Brazil, Argentina and Paraguay. The soybean meal price was projected at $375 per short ton, up $45 from last month but $17 less than the average for 2020-21.

  • Dry hay: The annual Crop Production report estimated production of all dry hay at 120.2 million tons, down 5% from the 2020 total. Area harvested was estimated at 50.7 million acres, down 3%, while average yield was 2.37 tons per acre, down 0.06 ton from 2020.

Production of alfalfa and alfalfa mixtures hay was estimated at 49.2 million tons, down 7% from the 2020 total. Harvested area, at 15.2 million acres, was 6% below 2020, with average yield estimated at 3.23 tons per acre, down 0.04 ton from 2020. Record-high yields were estimated in California and Nevada.

Production of all other hay in 2021 totaled 71 million tons, down 4% from the 2020 total. Harvested area, at 35.5 million acres, was down 1%, with average yield estimated at 2 tons per acre, down 0.05 ton from 2020. Record-low harvested acres were estimated in California, Connecticut, Illinois and Oregon, while record-high harvested acres were estimated in Texas and Utah. Record-high yields were estimated in Alabama, California, Georgia, Iowa and New York. Record-low production was estimated in Massachusetts, Minnesota and New Hampshire.

  • Forage output: The annual Crop Production report also summarized forage production across 17 states included in the forage estimation program. The 17-state total for all forage production was 81.6 million tons in 2021, of which 42 million tons were produced from alfalfa and alfalfa mixtures. The total 2021 all haylage and greenchop production was 29.9 million tons, of which 20.2 million tons were from alfalfa and alfalfa mixtures. Watch for an annual statistical review of forage production in the March 2022 issue of Progressive Forage.

  • Hay stocks shrink: The USDA’s quarterly Grain Stocks report estimated all hay stored on U.S. farms as of Dec. 1, 2021, totaled 79 million tons, down 6% from a year earlier and the third-lowest inventory for that date since 1977. Hay “disappearance,” an estimation of use, totaled 59.2 million tons for the period May 1-Dec. 1, 2021, down 6% from the same period in 2020. Record-low hay stock levels were estimated in Maine, Massachusetts, Minnesota, North Dakota and Oregon.

  • New alfalfa seeding is record low: Finally, looking ahead to next year, the USDA’s monthly Crop Production report said growers seeded 1.65 million acres of alfalfa and alfalfa mixtures during 2021, down 25% from 2020 and a new record low. Among individual states, record-low alfalfa dry hay seedings were estimated in 25 states.

For more on the hay market outlook, read: Forage Market Insights: Transitioning into 2022.

  • Corn silage: U.S. production was estimated at 130 million tons for 2021, down 5% from the 2020 estimate. Average yield was estimated at 20.1 tons per acre, down 0.4 ton from 2020, while area harvested for silage was estimated at 6.48 million acres, down 3% from the 2020 estimate.

  • Cottonseed: The USDA reduced the size of the last year’s cottonseed harvest slightly, largely due to lower yields in Texas. The 2021 cottonseed crop is now estimated at 5.377 million tons, up about 942,000 million tons (21%) from 2020.

California QIP petitions filed

Two petitions related to California’s Quota Implementation Plan (QIP) were submitted to the California Department of Food and Agriculture (CDFA) in December. Petition one seeks to terminate the QIP; petition two seeks a public hearing to consider the whether the QIP should be reapproved. Both petitions were submitted by the STOP QIP organization.

In spring of 2021, a referendum to sunset the QIP in early 2025 fell short of the necessary votes, leaving the program in place for the foreseeable future.

Northeast organic partnership launched

The Northeast Organic Family Farm Partnership has been formed to provide markets for organic dairy producers in the Northeast.

Short term, the partnership seeks to create permanent markets for 135 farms facing terminated milk supply contracts. Danone North America, owner of Horizon Organic, has notified 89 organic dairies in four states that milk supply contracts will be terminated in February 2023. In addition, Maple Hill Creamery announced the cancellation of contracts for an additional 46 farms. Read: Danone extending Northeast organic contracts until February 2023.

Launched by Gary Hirshberg, co-founder and former long-time CEO of Stonyfield Organic, said the Northeast Organic Family Farm Partnership is a collaboration of farmers, processors, activists and government agencies.

The partnership asks consumers to sign a pledge to purchase one-fourth of their weekly dairy purchases from 35 brands which have committed to increase their purchases of Northeast organic family farmers’ milk.

The partnership is also inviting grocers, restaurants, cafeterias and any outlets that sell dairy products to become licensed partners, signing affidavits to grow their organic purchases, and are eligible to display the partnership logo in point-of-sale and online marketing.

November 2021 butter, powder output lower

While the preliminary November 2021 milk production estimate was down from a year earlier, dairy product production was mixed, according to the USDA’s monthly Dairy Products report.

November 2021 total cheese production was estimated at 1.12 billion pounds, 1.6% more than the same month a year earlier but 2.9% less than October 2021. Output of Italian-style cheese continues to be strong, up 6.2% over November 2020, but American-style cheese production slipped 2.7% from last year and 4.6% from October 2021.

November butter production fell sharply, down 9.6% from November 2020 and 3% less than October 2021. Nonfat dry milk and skim milk powder followed suit, declining 15% and 24.5%, respectively, from a year ago.

USDA buys milk

The USDA’s Agricultural Marketing Service announced details regarding dairy product purchases for domestic feeding programs. In latest announcements, the USDA:

  • Awarded a contract to Dairy Farmers of America to deliver 8,100 gallons of fresh, 2% milk (in one-half gallon containers) to Virginia locations between Feb. 3-Mar. 2

  • Canceled a solicitation for delivery of 92,340 pounds of butter during the first quarter of 2022 due to no offers  end mark