The USDA’s 2022 Census of Agriculture revealed a drop in farm numbers, rising costs, and an aging average American farmer. However, the report highlighted the dairy industry’s consolidation, with 24,082 farms reporting off-farm milk sales in 2022, a 38.7% decrease from 39,303 in 2017. According to the census, approximately 65% of U.S. dairy cows are now found on operations with more than 1,000 head, a 10% increase from 2017. Furthermore, 6.5% of cows were found on operations with fewer than 100 head in 2022, a decrease from 12.7% in 2017.
Milk production is stable to slightly higher in most parts of the country, with mild winter weather promoting seasonal growth in milk volumes. However, numerous market stakeholders report that output is lower than last year due to producer exits and reductions over the last 12 months. In the Central region, spot milk availability is much lower than it was in 2023, with prices ranging from $10 to $2 under Class. Cheesemakers have expressed a desire to increase processing to build inventories ahead of the spring holidays, but labor disputes at some plants have resulted in slower production schedules. Retail demand varies across the country, with some regions performing better than others.
The spot Cheddar block market did not acknowledge it as prices eroded during the second half of the week. Blocks finished the week at $1.48/lb., down 9¢ from last Friday as 16 loads traded hands. Meanwhile, barrel prices rose steadily, reaching a new high for the year at $1.6075/lb. This week’s cheese market dynamics have pushed the inverted block barrel spread to 12.75¢, the highest gap since June 2023.
The whey market has been subdued in recent days, with the CME spot dry whey market ending Friday’s trade unchanged at 53¢ per pound. Slower-than-expected cheese production has reduced the whey stream, tightening the whey market at the edges. Class IV markets moved in opposite directions this week, with butter gaining ground and nonfat dry milk (NDM) losing ground. The spot butter market gained traction this week, with prices reaching $2.75/lb. on Friday, up 6¢ from the previous week.
Feed and grain markets continued to fall this week, as agricultural economists and stakeholders gathered for the USDA’s annual Outlook Forum. Plentiful supply expectations and healthy inventory levels pushed grain markets lower, which will be good news for dairy producers looking for additional feed cost savings. On Friday, MAR23 corn settled at $4.165/bu., down 14¢ from Monday, and MAR23 soybean meal took a more modest dip to $345.60/ton.
Original Report At: https://www.jacoby.com/market-report/usda-unveils-2022-agriculture-census-findings/
