Sauk Prairie Veterinary Clinic
Herd the Moos
January 2015
estimated $17.82 December Class III, the
Gift Certificate Winners
year-end average would be $22.37 per
The winners of the three gift certificates
hundred weight. That would be more than
from SPVC are:
double the Class III average of just five
- $100 Wyttenbachs – Z & Z Farms
years ago in 2009 at $11.36. (from Hoards)
- $75 Green Acres – Meadowood Farms
What about 2015? In the most recent
- $50 Jose’s in Baraboo – Tim Johnson
issue
of Progressive Dairyman there is an
Dairy Optimists
article about the 3 key indicators for milk
Tuesday, January 13, 2015
prices going forward. The key factors that
We will be meeting at 7:00 PM in Room
this author, Calvin Covington, looks at are
21 at the Sauk Prairie High School. Paul
milk cow numbers, commercial
Peetz, sales manager at Milk Rite, will
disappearance of milk product and dairy
demonstrate the VaDia milk evaluation
product inventories.
system. This tool was developed in Norway
Milk cow numbers have been growing,
and can provide tremendous information on
the US dairy herd added 69,000 cows from
your milking system. It can assist you with
November 2013 through October 2014. The
analyzing milk prep, lag time, machine on
general rule is that for every 50,000 we add
time, teat end vacuum, pulsation ratios, and
to our herd it increases the annual milk
much more. Come to the meeting and see
production by 1.2 billion pounds or roughly
how this instrument can provide tremendous
0.5 percent. If culling does not pick up then
information about your milk harvest process.
this will apply a strong downward pressure
2015 Goal Setting
on prices.
Have you written out your goals yet?
Commercial disappearance, both
Those who write down their goals are over
domestic and export, have been slipping.
80 percent more likely to accomplish them
Domestic use leveled off in 2013 but exports
than those who don’t record them. Also
increased dramatically. This increase in
sticking with 1-2 goals makes people more
exports explains a major portion of the
successful than trying to accomplish too
record rise in milk prices for 2014.
many different things. What are your goals
Unfortunately, exports are falling
for 2015? Share them with your herd
dramatically. September 2014 butter
veterinarian so they can help you come up
exports were only 25% of the amount
with ideas on how to accomplish them and
exported in September 2013. Domestic
maybe even help monitor it for you if it
usage could grow in 2015 as prices drop and
involves improving reproduction or DHI
if the economy continues to grow. Any
parameters in your herd that we can monitor
internal usage will help soften the blow from
through Dairy Comp.
the reduction in exports that we are seeing.
2014 Milk Price is a Record Year
Dairy product inventories have started to
What about 2015?
grow since October. If this continues into
2014 milk-price books as a record year
the first quarter of 2015 we will see further
with the first 11 months each posting
downward pressure on milk prices. The
watermarks for Class III prices. With an
expectation is for 2015 prices to be at least
$6 below 2014.
What’s Happening in the World?
Everyone has come to realize that milk is
a worldwide commodity. There are many
countries involved in the import and export
of dairy products. Here are a few
observations that have come across our
desks lately. The European Union (EU) has
been growing rapidly in 2014. The milk
production information includes 28
countries in the EU and is referred to as the
EU-28. Production in October was up 3.4%
over last year. This marks the first month of
2014 that production gains year over year
were under 4%. This could be a sign that
milk production may start to slow for the
EU-28.
The leading production gains in October
were in the United Kingdom (UK), Italy and
Germany. France and Poland saw
production slide the most.
In the UK, processors have lowered
prices for January 2015. The average milk
price paid in the EU for October was
$19.31/cwt (35.20 Euros/100 kg). Producers
expect prices to continue to slide in 2015
which will tighten profit margins even
further.
Meanwhile down under, in Australia,
milk production is up 3.5% over last year at
this time. Victoria accounts for almost two
thirds of the whole country’s production.
Interestingly, the state of Tasmania has seen
production jump 13.5%. The central portion
of the country (Queensland and South
Australia) has shown decreased production.
Just like here, producers are seeing a drop in
prices. Additionally, dry weather in a large
portion of the country may lead to an early
end to the grazing season. The cost of
irrigation is up 44% over last year. Cull
cows are bringing slightly better prices
compared to historical averages. The
combination of low rainfall, lower milk
prices, and higher cull prices could lead to
more pressure on dairy producers to end the
milking season sooner.
China is racing to modernize their dairy
industry. According to an article in the
January 1, 2015 Progressive Dairyman (pg.
44), "Europe took more than 100 years to
modernize its dairy industry. The US took
about 80 years to do it. Mexico did it in 50
years. China is trying to do it 10 to 15
years." One reason they are doing this is
because when people move from rural areas
to cities their milk consumption goes up
350%. It is anticipated that 300 to 400
million rural residents (roughly equivalent to
the entire US population) will move to cities
in the next decade. If this prediction comes
true, China would need new milk production
capacity that would be equal to the annual
milk produced in both New Zealand and
Australia in order to meet the increase in
demand. They are trying to fill as much of
the anticipated shortage by the rapid
expansion and modernization of their dairy
industry. Chinese dairy producers received
$31 to $34 per cwt for their milk in 2014.
The main issue is getting quality forage to
feed to their cows. They do not grow much
alfalfa and must import it for over $450/ton.
At the current time, the use of GMO crops is
also prohibited. There are many people
pushing to allow the use of GMO crops
which could help boost feed quality.
Now that Russia has banned food
products from the US, the EU, Australia and
Canada, where do they get their food
products? Argentina is hoping to capture
more of this market. Russia currently
imports 25% of the cheese produced in
Argentina. They are hoping to increase their
market share in Russia in 2015 to help offset
lower milk prices. In September, average
milk price was $16.50\cwt. This follows
even lower prices than dairy producers faced
in Argentina in 2012 and 2013. The export
of the higher profit item, cheese, may help
boost farm gate prices in 2015.