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Weekly Digest: U.S. hay inventories rebound for some dairy states

Progressive Dairy Editor Dave Natzke Published on 15 January 2020

Digest Highlights

U.S. hay inventories rebound for some dairy states

More major dairy states entered winter with larger on-farm dry hay inventories compared to a year ago, based on a semiannual hay stocks report from the USDA. For many, however, hay quality remains a question.

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All hay stored on U.S. farms as of Dec. 1, 2019, totaled nearly 84.5 million tons, up 7% from a year earlier, according to the USDA. Despite the rebound, the total still represents the third-smallest inventory since 2006.

Overall, the largest increases in stocks from one year ago were seen in Kansas, Missouri, Montana, South Dakota and Texas, all resulting from increased production. Hay stocks levels for Dec. 1 were record lows in Connecticut, Illinois, Indiana, Maine, Minnesota, Pennsylvania and Rhode Island.

Among the 24 “major” dairy states listed by the USDA, 12 had more hay compared to a year earlier, with inventories down in 11; Idaho was unchanged. At 43.9 million tons, total dairy state dry hay inventories were up nearly 2.9 million tons (7%) from Dec. 1, 2018 (Table 1).

011320 natzke dairy state hay stock

Dairy states with largest hay inventory increases compared to a year earlier were Kansas (up 1 million tons) and South Dakota and Texas, up 900,000 and 750,000 tons, respectively.

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Decliners were led by Minnesota, where hay stocks were estimated to be down by 350,000 tons. Pennsylvania and Ohio inventories were down 163,000 tons and 150,000 tons, respectively.

For more current hay market news, visit the Progressive Forage website.

Central Valley dairies add to RNG supply

Calgren Dairy Fuels and Southern California Gas Co. (SoCalGas) have started sending methane produced from four more Central Valley dairies to Calgren’s biogas operation in Pixley, California, where it is processed into renewable natural gas (RNG).

The Calgren facility now collects methane from more than 66,000 cows at 10 area dairy farms. Calgren partnered with Maas Energy Works to develop the four new dairy digesters, adding to six dairy digesters that have been operating since 2018. The additional dairies are projected to nearly double the amount of RNG produced at the facility, further reducing greenhouse gas emissions and displacing more traditional natural gas. After processing, the RNG is injected into SoCalGas' system.

Animal Agriculture Alliance follows activist trail

The Animal Agriculture Alliance launched a new website and updated resources to help farmers, ranchers, veterinarians and others engage in conversations about animal agriculture.

One of the newly updated resources is the animal welfare activist groups web. The web details how activist groups are connected through funding, project collaboration, and flow of staff and volunteers.

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DMC probabilities, enrollment updates

The USDA’s Dairy Margin Coverage (DMC) Decision Tool estimates margin ranges and payment probabilities based on current milk and feed futures prices. After peaking at $12.21 per hundredweight (cwt) in November 2019, DMC monthly margins were expected to move lower in December 2019 (to be announced on Jan. 31) and into the first half of 2020.

As of Jan. 14, DMC margins had a 23%-31% probability of falling below the top insurable level of $9.50 per cwt between April-October 2020 and a 11%-21% chance of falling below $9 per cwt over the same period.

As of Jan. 6, the USDA reported that 12,866 operations, or 47.2% of operations with production histories, had enrolled in the 2020 DMC program. About 114.4 billion pounds of milk, or about 55% of total annual established milk production history, was covered for 2020.

That compares to 23,336 operations (82%) enrolled and 180.6 billion pounds of milk production history (82.5%) covered in 2019.

Loeffler joins Senate ag committee

Republican Kelly Loeffler was formally sworn in as the newest U.S. senator from Georgia, replacing retired Sen. Johnny Isakson. Among her appointments, Loeffer will serve on the Senate ag committee.

The USDA added Georgia as a “major dairy state” in 2019.

Loeffler’s term is short; she’ll be up for re-election this November.

Proposal seeks tighter checkoff oversight

U.S. Rep. Dina Titus (D-Nevada) introduced the Opportunities for Fairness in Farming (OFF) Act, a bill that proponents say will add accountability and transparency to producer-funded checkoff programs.

The legislation, H.R. 5563, would prevent USDA checkoff programs from paying organizations that lobby on agricultural issues, prohibit anticompetitive behavior, ban activity that involves a conflict of interest and require audits to ensure compliance. It has been referred to the House ag committee.

Eight signposts for U.S. dairy exports in 2020

The U.S. Dairy Export Council’s Alan Levitt, vice president of market analysis and communications, and William Loux, global trade analyst, have compiled a list of factors that are most likely to influence dairy trade in the year ahead. These eight “signposts” will help guide the direction of global dairy markets and influence U.S. dairy export performance in 2020. They include:

1. Impact of the U.S.-Mexico-Canada Agreement (USMCA) and Japan trade deals, and further talks with Japan

2. Depleted European Union intervention stocks allows U.S. to reclaim market share.

3. Progress to resolve the U.S.-China trade war

4. The status of African swine fever and Chinese swine herd recovery

5. China and Southeast Asia’s dairy appetites

6. Buyer (and consumer) willingness to spend more for dairy

7. Milk production is coming back, but growth will still be modest.

8. Global economic growth and geopolitical flare-ups

Get more details on the U.S. Dairy Exporter Blog.

Hawaii DOH ends enforcement action against Big Island Dairy

Hawaii’s Big Island Dairy is out of business, but it met all of the state department of health’s enforcement actions to address water pollution act violations.

According to Keith Kawaoka, the health department’s deputy director of environmental health, the former 2,500-acre dairy operation met requirements that included: stopping all milking and creamery operations, eliminating its wastewater system, removing all dairy cows from confinement and reducing its herd to nearly zero and paid $87,000 to the Center for Food Safety to complete environmental projects. The Center for Food Safety represented the local citizens group that filed a federal lawsuit against the dairy owners for Clean Water Act violations.

“It’s disappointing that Big Island Dairy was unable to fill the need for local milk and milk products, while also meeting all federal and state environmental regulations to protect local communities and our delicate ecosystems,” Kawaoka said.

In 2019, DOH issued an administrative order requiring the dairy owners to ultimately cease discharging wastewater, pay either a monetary penalty or support a DOH-approved environmentally beneficial project. Due to factors associated with its operation, owners of the dairy decided to close its business and seek the sale of its assets in late 2019.

Fairlife enters creamer market

With Coca-Cola finalizing the purchase of fairlife LLC, the company has debuted fairlife creamers. The line of premium products, made with ultrafiltered milk, is available in four varieties: hazelnut, caramel, vanilla and sweet cream.

The coffee sales category is expected to grow from $15.1 billion in 2019 to $18.5 billion by 2024; the creamer market is projected to grow alongside it, from $6.1 billion to $7.5 billion by 2024.

Upper Midwest milk hauling charges rose at slower rate in 2019

Average milk hauling charges in the Upper Midwest Federal Milk Marketing Order (FMMO) rose in 2019, although the increase was lower than the year before.

A summary of an annual study, “Milk Hauling Charges in the Upper Midwest Marketing Area, May 2019,” shows the simple average hauling charge for all producers was 48.5 cents per cwt, up from 46.8 cents (about 3.7%) per cwt the year before.

As a producer’s milk volume increased, the average hauling charge on a per-hundredweight basis decreased. The weighted average cost across all milk deliveries was 29.6 cents per cwt, up from 27.8 cents (6.4%) per cwt in 2018.

The report, prepared by Corey Freije with the Upper Midwest market administrator’s office, examined hauling charges to the first point of delivery for 4.1 billion pounds of milk from 10,831 producers in FMMO #30. Milk volume was up about 12 million pounds, but producer numbers were down 586 from the year before.

Other highlights of the summary include:

  • Wisconsin simple average hauling charges rose about 1.3 cents per cwt in 2019 to 41.7 cents per cwt, but the weighted average was unchanged at 23.9 cents per cwt.

  • Minnesota simple average hauling charges rose only one-tenth of a cent to 55.9 cents per cwt in 2019, but the weighted average increased more than a nickel to 35.7 cents.

  • Due to the smaller number of farms and greater distance to processors, dairy farmers in Michigan’s Upper Peninsula (UP) and North Dakota again had the highest average hauling charges in 2019. The Michigan UP simple and weighted averages were both above $1.11 per cwt, while North Dakota’s simple and weighted averages were $1.15 and 65.9 cents per cwt, respectively.

The hauling charges consist of deductions shown on producer payrolls, submitted to the FMMO administrator’s office by handlers. Charges may not necessarily reflect the actual cost of the hauling because in some cases, handlers or cooperatives waive or subsidize hauling costs. Also, some producers pay the hauling costs directly.

Once published, full studies are posted on the Upper Midwest FMMO website.  end mark

Dave Natzke
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