To Understand Current Milk Markets
On July 23, 2018
To Understand Current Milk Markets
Each week brings snippets of positive and negative news from the milk markets. Dave Swartz, Assistant Director of Programs for Animal Systems, Penn State Extension, explains near term futures prices took a direct hit from the retaliatory tariffs imposed on milk products from two of our largest trading partners, Mexico and China. Class III futures now average right at $15.00/cwt for the balance of 2018. Obviously, the expected modest price recovery that was predicted for the third quarter of 2018 will probably not be realized.
The tariff situation is a dark cloud amidst a very positive position for dairy trade. Dairy product exports for April set new records and May’s monthly export volumes were the 3rd highest on record. Nearly 200,000 tons of dairy products left American shores in May, up 17% from May of 2017. For the year, exports are averaging 6% over 2017 levels. In May, America exported the equivalent of 17.2% of its production and imported 3.3% of its production, for a net outflow of 14%. While trade issues take our attention, there are several large domestic factors that have to be solved in order to sustain any lasting price recovery. Those factors are overproduction and inventory levels.
In the last 10 years, the United States has increased its milk production by 16%, from 185 million lbs to 215 million lbs. While there has been excellent growth in domestic consumption of cheese and butter, overall milk and dairy product consumption has not kept pace with the growth in milk supply. As a result, all dairy markets, including organic markets, are currently oversupplied. After a sustained period of low prices, cow numbers usually decrease, and while cow numbers decreased slightly in the Northeast last year, cow numbers and production per cow increased nationally. The old line which said, “The fix for low prices is low prices, “ doesn’t seem to apply to today’s milk production! Until we correct this oversupply problem, there is little hope for much price recovery.
The second large domestic factor that must be solved is our huge dairy product inventories. The United States now has nearly 1.4 billion lbs of cheese in inventory, a new record. In 2014, our cheese inventories averaged 1 billion lbs, so we have increased the inventory of cheese by 40% in 4 years! We are rapidly building inventories of cheese because we are overproducing cheese. We are overproducing cheese because we are overproducing milk. Building cheese inventories at this rate is unsustainable. Our cheese inventories are now so large that we could meet our entire national need for cheese for nearly 2 months just from inventory!
These two large domestic problems, overproduction and historically large inventories, will continue to be the major drivers in the futures markets, notwithstanding the weekly volatility and turmoil caused by the headlines of the day.
However, even with recent turmoil in the markets, most dairy producers in Pennsylvania have their eye on the sky. Conditions have turned dry over much of the state, and with historically low milk margins, producers know that they don’t have the money to purchase additional feed next year due to a less than average crop this year. Thunderstorms have been providing some spotty moisture, but right now, the threat to their business from drought stressed crops looms as large in Pennsylvania dairy producers minds as a prolonged trade war.
To Learn To Improve Your Horse Pasture
As equine owners, you face many challenges maintaining healthy horses and environmentally friendly farms. Learn how to improve and maintain your pastures and much more while benefiting the environment at our Environmental Stewardship Short Course. Penn State Extension has partnered with the Allegheny County Conservation District to offer this popular course at reduced cost.
The course will run for two full Saturdays on Aug. 4 and 25 from 10 a.m. to 4 p.m. It is open to all interested horse owners, barn managers and equine industry personnel. It will be held in the Howard R. Stewart Visitors Center of the Round Hill Park in Elizabeth, Pa.
Thanks to a grant from the Pennsylvania Association of Conservation Districts, the price is only $25 per person and includes lectures, activities, materials and lunch. Advanced registration is required before July 29. Registration information can be found at https://extension.psu.edu/equine-environmental-stewardship-short-course or you can register by calling 877-345-0691.
Speakers will include Laura Kenny, Equine Educator with Penn State Extension; Danielle Rhea, Agriculture Conservationist with Allegheny County Conservation District; Rachel Milliron, Field and Forage Crops Educator with Penn State Extension; and Justin Brackenrich, Field and Forage Crops Educator with Penn State Extension.
Those attending the course will develop the knowledge and skills to adopt environmentally sound practices aimed at managing healthy animals, healthy farms and a healthy environment. On Aug. 4, topics will include forage biology and grazing management, forage species identification and selection, pasture evaluation and renovation and soil fertility. There will be take-home assignments to complete on the farm and discuss during the next class. On Aug. 25, we will cover weed management, plants toxic to horses, manure risks and benefits and solutions to farm water problems. This program is recommended for anyone who currently owns a horse or horse farm, is thinking of purchasing a farm, or works with horse farm owners.
To receive a brochure about the course, Contact Laura Kenny, Equine Extension Educator (lbk8@psu.edu) or call 610-489-4315. To learn more about the Penn State Equine Team programs visit the website at https://extension.psu.edu/animals-and-livestock/equine.
Financial and other support for this project is provided by the Pennsylvania Association of Conservation Districts, Inc. through a grant from the Pennsylvania Department of Environmental Protection under Section 319 of the Clean Water Act, administered by the U.S. Environmental Protection Agency.
To Be On The Lookout For The Spotted Lattern Fly
This week the Spotted Lattern Fly was found on a farm in Southern Lancaster County near Quarryville. This means the insect has moved a significant distance from Berks county where it was found in large numbers last year.
As many of you are aware, the spotted lanternfly (SLF) is a new invasive insect that was first discovered in the US in Berks County in 2014. It has since spread throughout 13 counties in southeastern PA, which the PA Department of Agriculture (PDA) has designated as a SLF quarantine zone. Because this is the first population of the SLF outside Asia, it’s difficult to assess the magnitude of the threat that SLF presents, but it is potentially the worst introduced insect pest since the gypsy moth nearly 150 years ago.
From what we know, the SLF is a significant threat to PA agriculture, landscapes and natural ecosystems, including grapes (where heavy damage has already been recorded), and the tree-fruit, hardwood, and nursery industries, which collectively are worth nearly $18 billion to the state’s economy, as well as for outdoor recreation, backyard enjoyment, and biodiversity.
The current quarantine zone encompasses thirteen counties, including Lancaster County. All residents and businesses must comply with the quarantine regulations. A Spotted Lanternfly permit is required for any business performing work within and/or moving goods out of a quarantine zone. This will include farm businesses such as nurseries, greenhouses, woodworking businesses, and others which sell materials that could contain eggs, young or adult SLF, thereby spreading the pest around.
The following training and testing sessions for permits are being offered by Penn State Cooperative Extension and the PA Department of Agriculture: Paradise Township Bldg., 2 Township Dr., Paradise, PA August 3, 1-3pm, Gideon King Hardware, 466 Elam Rd., Kinzers, PA August 9, 1-3pm and Daniel’s Farm Store, 324 Glenbrook Rd., Leola, PA August 10, 1-3 pm. For More information or to register contact Jeff Miller, PA Dept. of Ag., at 717-772-5206 or jefamiller@pa.gov.
Quote Of The Week: “I never did anything by accident, nor did any of my inventions come by accident; they came by work.” Thomas Edison