Status of Wisconsin Agriculture 2010 - Agricultural & Applied ...

Dollars per Hundredweight
$16.00
$15.00
$14.00
$13.00
$12.00
$11.00
$10.00
$ 9.00
increased to $16.60 by December.
The average for the year was
$13.07, down $5.86 from 2008.
In addition to market prices, dairy
producers received MILC payments
on eligible milk. MILC payments
were triggered in February of 2009,
reached a high of $2.0056 per hundredweight
in March and declined
to $0.35 in November. There were
with no payments in December.
MILC payments on eligible milk
over the 12 months of 2009 averaged
$1.51 per hundredweight.
Outlook for 2010
Class III, Class IV and Wisconsin All-Milk Price, 2009
Class III
Class IV
All-Milk
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec*
Farm milk prices will continue to
strengthen in 2010 and average
much higher than in 2009, driven by
a continued decline in cow numbers
and milk production, improved
domestic sales of milk and dairy
products, and growth in dairy
exports. The strength of these forces
will determine how much milk prices
increase as the year progresses.
Milk cow numbers are likely to
decline at least through the first
three quarters of the year. The low
milk prices experienced during 2009
eroded equity on many dairy farms,
and it will take several months of
improved milk prices—perhaps into
2011—to restore these losses. In the
meantime, financial institutions will
be leery of lending money for dairy
Source: NASS, USDA
*December 09 is author’s estimate
expansions and startups. Dairy cow
slaughter will remain relatively high
until returns over feed cost become
much more favorable, at least
through the first six months of 2010.
And the number of producers leaving
the business is likely to be
higher during the winter and early
spring of 2010. Milk cows are
expected to average 8.976 million
head in 2010, down 2.4 percent
from the estimated 2009 average.
While milk prices will continue to
improve, relatively high feed costs
may keep returns over feed costs
unfavorable through the end of the
second quarter and possibly into the
third quarter, particularly in the
Western states. In December 2009,
corn futures were near $4 per bushel
for all 2010 contracts. Soybean meal
may average a little lower in 2010.
In December 2009, soybean meal
futures were at or slightly below
$300 per ton for all 2010 contracts.
Forages could average lower in
2010. October 2009 alfalfa hay
prices were down as much as 50
percent in California and Idaho,
25 percent in New Mexico, 9 percent
in New York and 13 percent
in Wisconsin.
The combination of unfavorable
returns over feed costs early in the
year and the financial stress could
also cause some producers to buy
less grain and concentrates, which
may limit increases in milk per cow.
Partially offsetting these factors is
the replacement of lower-producing
cows with higher-producing heifers.
Average milk per cow in 2010 is
estimated to increase 1.8 percent to
20,935 pounds.
With an average of 2.4 percent
fewer milk cows producing 1.8 percent
more milk per cow, 2010 milk
production would total 187.9 billion
pounds, 0.7 percent less than 2009.
USDA’s December 2009 milk supply
and demand estimates also has
2010 total milk production at 187.9
billion pounds.
The very slow economic recovery
in 2010 will probably continue to
slow the growth of domestic sales
of milk and dairy products. USDA’s
November forecasts show very
limited growth in domestic milk
sales—only 0.3 percent for the year.
This adds up to an increase of about
450,000 pounds of milk. But there
are indicators that domestic sales
Milk Cow Numbers, Milk per Cow and Total Milk Production, U.S.
2008-2010
2009 Estimate 2010 Forecast
2008 Actual Number %Change Number %Change
Milk cows
(1,000 head) 9,315 9,200 -1.2 8,976 -2.4
Milk per cow
(pounds) 20,396 20,565 +0.8 20,935 +1.8
Total milk
production
(billion pounds) 190.0 189.2 -0.4 187.9 -0.7
Source: 2008—USDA, NASS; 2009 and 2010—author’s estimate
20 STATUS OF WISCONSIN AGRICULTURE 2010—CURRENT OUTLOOK: DAIRY