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TheDairySite Newsletter - 21 March 2014

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Friday 21st March 2014.
Michael Priestley - Editor

Michael Priestley

Novus International

MSD Animal Health

How Long Will Current US Dairy Margins Last?

Market factors mean younger US dairymen are currently seeing more profitability in dairy farming than at any point in their careers, says Pennsylvania University’s latest outlook.

The standard profit measure of ‘income over feed’ costs rose by six per cent last month to US$12.02/cow/day – the highest since the metric commenced in January 2000.

Lower feed prices and a record Class III milk price of $23.35 have been helped by a stronger harvest and Chinese demand supporting the world dairy market.

However, the International Farm Comparison’s feed price indicator indicates grain markets are creeping higher as diplomatic tensions in Ukraine rumble on.

Nevertheless, helpful margins are having a limited effect on overall production as cautious producers use cash to address debts.

According to Wisconsin University’s Professor Bob Cropp, many businesses are financially recovering from the depressed prices of 2009 and the 2012 drought.

Rather than being a potential growth period for the US industry, Professor Cropp sees current helpful margins as a time for consolidation.

However, corn $4.50-4.75/bushel, rather than $7 corn of a year ago, is allowing drought-hit states to produce more milk.

In his March outlook this week, Professor Cropp wrote that California milk production ran around five per cent higher for January and February: “California and Texas margins are very favourable for milk production."

He added: “California has added milk cows and improved milk per cow. The severe drought is not impacting milk production at this time.”

He outlined a production drop seen in Idaho, the Upper Midwest, New Mexico and several other northern states.

Professor Cropp attributed this partly to sub-par feed after the Midwest’s wet spring and dry summer last year.

He added: “The extreme cold this winter may also have added to some herd health issues.”

Ultimately though, Professor Cropp sees US milk production improving through 2014 as cow numbers and milk per cow output increases.

Summarising the effect of greater profitability on herd size, Prof Cropp said: “Despite rather high slaughter cow prices dairy cow slaughter thus far this year has been nine per cent below a year ago.

“With favourable margins lower producing cows that normally would be culled are still profitable to milk.”

Analysts foresee lower milk prices this year, although no sharp downturn is on the cards.

In its quarterly dairy report, Rabobank said global production has been assisted by ‘generally excellent weather’, barring Australia and the Northern US.

Rabobank stated tight supplies are becoming ‘an increasing nightmare’ for importers as China more than accounts for recent increases in milk.

Demand will hinge on Chinese buying remaining strong which is uncertain given efforts to stabilise domestic supplies and its lower currency, Rabobank stressed.

Analysts now eagerly await the April/May spring flush to determine how much prices will ease.

Rabobank predicts 20 per cent more dairy on the export markets for the first half of the year.

Professor Cropp expects Class III milk to end the year at $18 and be in the $19-$20 range by early summer.

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This Week's Articles and Analysis

Managing Snowmelt on Farmsteads
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March Issues: Watch Cash Flow and Grazing Progress
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Quantifying the Benefits of Rinderpest Eradication
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Watch For Spring Thaw and Wasted Feed
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Company News

Merck Animal Health Launches Scholarship Program with the American Veterinary Medical Foundation
US - Merck Animal Health today announced the recipients of the Merck Animal Health Veterinary Student Scholarship Program, awarding $100,000 in scholarships to 20 veterinary students.
Life Technologies Introduces First USDA-Licensed Real-Time PCR Test for the Detection of Tritrichomonas foetus DNA in Bulls
US - Life Technologies Corporation, now Thermo Fisher Scientific, today announced the availability of the only USDA-licensed, real-time PCR test to detect Tritrichomonas foetus (T. foetus) – a sexually transmitted disease in cattle that leads to early embryonic losses and infertility, resulting in significant economic impact to the cattle industry due to open (non-pregnant) and late-calving cows.
Thermo Fisher Scientific Acquires Prionics
GLOBAL - Thermo Fisher Scientific Inc. has this week announced the completed acquisition of Prionics AG, a privately held animal health diagnostics company.
CID Lines Receives Visit from Danish Importer
BELGIUM - CID Lines recently hosted a visit by 34 sales reps from its Danish importer, DLG.
Three Indications Towards Fertility Improvement for New GnRH-analogue From Zoetis
UK - A new product containing a GnRH-analogue for use in cattle fertility improvement programmes has been launched by Zoetis.
Market Reports

USDA National Dairy Products Sales Report - 19 March 2014
USDA Milk Production - 19 March 2014
USDA Livestock, Dairy and Poultry Outlook - 14 March 2014
Availability & Usage of Milk by Dairies in England & Wales – January 2014

Global Dairy Industry News

   United States

FDA Allows More Time to Comment on Food Safety Modernisation Act
Daily Dairy Trading: Futures Close Lower, Tuesday
Daily Dairy Trading: Cheese Returns to February Highs, Monday
Daily Dairy Trading: Block-Barrel Spread Widens to 10 Cents, Friday
Antibiotics Endgame to be Explored by Summit Panel


World Water Day: Agriculture and Water Inextricably Interlinked
Flood Recovery Could Benefit From 30 Day Rule
First Global Feed Sustainability Guidelines Released
Feed Acid Market Estimated at US$2.6 Billion by 2018
World Dairy Closes Lower For Third Consecutive Trade
Global Roundtable for Sustainable Beef Invites Public Comment on Draft Principles & Criteria
Steady Increase in Incidents of Low Levels of GM Crops in Traded Food, Feed


Anthrax Kills Four Cattle in Southern Africa


90 Per Cent of Milk Now Under New Dairy Package Contracts


Brazilians On 10 Year Path to 40 Per Cent More Milk and Meat
Sky High Milk Prices Drop in New Year
Americans In Pursuit of Brazilian TB Test

   United Kingdom

Winter Crop Areas Up, Livestock Down
2014 Budget: Good News for Agriculture, but Not Permanent
Latest Saturated Fats Study Welcomed By Dairy Leader
Major Step for Dairy Sustainability as Programme Membership Grows
Fewer Cattle Overall in UK, Most Recent Census Shows
Evidence Period for Voluntary Code Review Extended
Research Council Celebrates 20 Years of Advances in Animal Welfare
Updated Animal Health Surveillance Announced
Holstein Judging Winners Announced
More Beef at This Year's NEC Livestock Event
Badgers Travel Further Than Thought
How Can Dairy Farmers Make Most Profit Returns on Capital?
Sustainability at First Milk Driven By 3Es Considerations
Large Herd Seminar Expands to Offer Practical Workshops
Farming Industry Sets Out Agenda for Low-carbon Food Production


Thousand Cattle Killed By Drought and Ragwort Combination


FMD Outbreak in Guinea Affects Cattle of All Ages
FMD NEWS: FMD Outbreak in Guinea Affects Cattle of All Ages

   European Union

EU Feed Industry Moves Towards More Responsible Soybeans Sourcing
First Package of Delegated Acts for Ag Policy Reform Criticized
EU Ag Sector Role in Economic Crisis Outlined at Major Conference


One of Two Egyptian Slaughterhouses Fails Australian Welfare Check

   South Africa

Loan Scheme to Get Cattle Back in the Kraal
Mpumalanga Cattle Affected by FMD Outbreak


Freak Hail Kills 500 Cattle


Rift Valley Fever Found Near Senegalese Capital City


Mexican Cattle Sector Has Lots to Do


Russian Ban Cuts Third Off Paraguayan Beef Revenues


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