by: Chris Zoller, Extension Educator, ANR, Tuscarawas County
The United States Department of Agriculture Economic Research Service (USDA-ERS) released its latest Livestock, Dairy, and Poultry Outlook on October 18, 2021. The complete report is available here: https://www.ers.usda.gov/webdocs/outlooks/102400/ldp-m-328.pdf?v=1833.8. Highlights of the dairy section of the report are provided in this article.
The latest report showed August milk production in the U.S. at 18.8 billion pounds in August 2021, a 1.1 percent increase over August 2020. Milk per cow was 1,987 pounds, a decline of one pound compared to August 2020. Heavy culling resulted in 19,000 less dairy cows in August compared to July. In fact, August was the third month milk cow numbers declined from the previous month.
What’s are the Contributing Factors?
While the percentage of milk cows in drought areas has declined to 40 percent for the week of October 5th, over 60 percent of the alfalfa hay areas have been in drought since mid-June. According to the National Oceanic and Atmospheric Administration (NOAA), the summer of 2021 was the hottest on record, resulting in reduced milk production.
There is often a several month lag in milk production response to milk and input prices. Feed prices have been relatively high in recent months compared to milk prices.
Higher labor and fuel costs are also contributing factors. The Farm Labor report released by USDA NASS on May 26 reported average hourly rates for farm workers increased six percent in April 2021 compared to April 2020.
In the first six months of 2021, NASS reported farmers paid less for fuel compared to the same period in 2020. However, in July the index was 3.1 higher than July 2020, and in August the index was 7.7 above the same month in 2020.
Feed Price Outlook
The most recent WASDE report has the 2021-2022 season average corn price at $5.45 per bushel. Soybean meal for 2021-2022 is projected at $325 per ton, a $35 reduction from the previous month.
Using the five-state weighted average, the report put premium alfalfa hay at $238 per ton. This is $6 higher than July 2021 and $46 higher than August 2020.
2021 Dairy Forecast
Based on declining milk cow numbers, increased feed costs, and higher culling rates, USDA-ERS has revised to 9.475 million the average number of head of dairy cows for 2021, 10,000 less than the forecast from the previous month.
Reduced milk production is expected for the final two quarters of 2021. Average milk production per cow is reduced by 50 pounds per cow from the previous month and is projected to be 23,960 pounds per year. Total milk production for 2021 is forecast at 227 billion pounds, 0.8 billion pounds below the July forecast.
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2022 Dairy Forecast
It is expected that milk cow numbers will continue their decline into the first quarter of 2022. As a result, USDA-ERS is projecting 9.45 million head, a reduction of 30,000 from the previous month’s forecast. Milk production per cow has been lowered by 25 pounds from the previous month’s estimate to 24,350 pounds per cow.
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Livestock, Dairy, and Poultry Outlook, USDA Economic Research Service, October 18, 2021. Available at: https://www.ers.usda.gov/webdocs/outlooks/102400/ldp-m-328.pdf?v=1833.8.
World Agricultural Supply and Demand Estimate (WASDE), USDA, October 12, 2021. Available at: https://www.usda.gov/oce/commodity/wasde/wasde1021.pdf.