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Milk, corn prices up in 2019

By: Jake Putnam
Published in Blog on  July 01, 2019

Boise—Milk prices are spiking according to the latest US Department of Agriculture statistics.

The USDA says that the nation’s dairy farmers have reduced the production of milk and that’s driving prices to the highest levels in years.

“Compared to the last 12 months of milk prices; we’re considerably higher than at any time in the past 12 months. We are $2 to $3 higher per hundredweight than last June. And that’s good news for a dairy industry that has struggled,” said market analyst Clark Johnston of  JC Management.

The latest Dairy Situation & Outlook, calls for milk production numbers well below one percent from the last quarter of 2018 and going into this year with February milk production just 0.1% higher than a year ago. 

In fact, March production was actually 0.6% lower than a year ago with April’s production up just 0.1%, all that means reduced milk product production and rapid product prices.

The latest dairy product production numbers are down 3.9% for butter, 3.2% for cheddar cheese, 0.7% for total cheese, 8.0% for nonfat dry milk and 14.2% for dry whey.

With flooding in the Midwest and a cold, wet spring slowed the 2019 corn crop.  That's not all, hay and grain crops are well behind last year and that means tighter supply and higher feed prices. The USDA Crop Progress report showed that 67% of the nations corn crop alone got off to a very late start.

“It's going to be really hard for that corn crop to get better,” according to Johnston. “it’s so late and the crop is so late that it'll be interesting to see the futures prices. I doubt it’ll be lower.”

So far Johnston’s doubt about low corn prices are panning out. The Chicago Mercantile Exchange corn futures contracts have spiked up more than .59-cents since May 1. Over the last 5 years, the same market this time of year has decreased an average of  .11-cents.

"This year we blew right through $4.20 per bushel corn. If you look at December futures right now they’re at $4.60. So corn is 80-cents a bushel high this year than last," said Johnston. 

That's bad news for cattle feeders and dairies that rely on corn feedstocks. But Johnston says cattle feeders, dairies and farmers can hedge their feed investments.

“They should buy corn now and if they’re worried about the prices coming down, then buy December futures. We had some our farmers buy futures 6 weeks ago, so they’ve locked in their December corn at $4.10, we are up to $4.60 right now. So they are doing really well. We are seeing more and more people start to look at those opportunities to hedge themselves,” added Johnston.

With late plantings, feedstock shortages, and uncertain trade issues, this could be one of the most volatile farm seasons on record. There are bright spots on the horizon, plenty of water and increased market demand for crops, but Johnson says there will be challenges. 

Farm Bureau members get marketing advice from Johnston and JC Management as a membership benefit. Contact Zak Miller 208-390-4636 of the Idaho Farm Bureau Federation on this partnership with JC Management.

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