Joe Horner Agricultural Economist University of Missouri

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Presentation transcript:

Joe Horner Agricultural Economist University of Missouri Impact of Dairy Prices on Farm US Dairy Farmer’s Perspective from Lower Midwest Joe Horner Agricultural Economist University of Missouri

Dairy Farms Face Falling Feed Prices Dairy Feedstuffs Price per Ton (as fed) US $/Short Ton NZ $/Metric Ton Corn Silage $40 $65 Corn Grain (Maize) $140 $226 Alfalfa Hay $180 $291 Soybean Meal $390 $631 Soyhulls $120 $195 Corn Gluten Feed $135 $218 Dried Distillers Grains $165 $267 Note: Missouri feed prices as of 5-25-2015, using current exchange rates.

Milk Prices in a NZ Perspective Period Missouri Milk Prices US$/100 Lbs. US$/Kg Milksolids NZ$/Kg Milksolids 2009 $12.53 $3.53 $5.56 2010 $16.45 $4.64 $6.43 2011 $20.14 $5.68 $7.18 2012 $18.05 $5.09 $6.28 2013 $20.31 $5.73 $6.98 2014 $24.80 $6.99 $8.42 2015 $17.88 $5.04 $7.41 2016 Thru April $15.36 $4.33 $6.37 2016 2nd Half* $15.61 $4.40 $6.47 Notes: US Mailbox Milk Prices, Southern Missouri. Conversion to NZ measures using 7.8% milk solids and average annual and current exchange rates. * Forecasts based upon Class III futures as of 5-25-2016, plus expected historical basis.

Historical USDA Income over Feed Cost (MPP) Margin Calculations for Perspective Note: April and May 2016 margins estimated

USDA MPP Income over Feed Cost Margins (US$/100 lbs.) Note: April and May 2016 margins estimated

US Dairy Sector Key Trends Declining profit margins Milk prices trending lower Feed costs trending higher Margins squeezed Not as bad as in 2009 or 2012 Milk production still growing Suppressed in most Western states Continued growth in Great Lakes traditional dairy states Big corn crop timely planted, El Nino turning to La Nina weather concerns