MONTHLY DAIRY AND MILK MARKET REVIEW

USDA raised the Class III milk price estimates from last month. This is due in part to reduced growth in per cow production, and higher feed costs.

Corn acres are forecast to be down 8 percent while soybean acres increase. Also in the “Prospective Planting Report” there are fewer acres of hay. In South Dakota, the amount of acres of new seeded alfalfa was down along with a reduction of acres expected to be harvested in 2008. This will keep forage prices high in the region.

Exports have helped boost demand with cheese and butter now leading over dry products. Global demand for dairy products and limited world supplies will keep US exports strong.

The month-to-month cow numbers in the 23 major dairy states continue to climb with 141,000 more head than last year and 9,000 more head than February 2008. This is the eleventh month in a row of increased cow numbers. USDA’s milk production report continues above a year ago levels.

The South Dakota’s milk production during the first quarter of 2008 increased 6.2 percent to 426 million pounds which is up 25 million pounds. There were 87 thousand head of milk cows compared to 84 thousand a year ago and 86 thousand the last quarter of 2007.

Also issued this month was the “Milk Production, Disposition and Income Summary” from USDA NASS. South Dakota increased the per cow annual production by 3.9 percent to 19,306 pounds.

In addition to an increase in dairy cows, 215,000 dairy cows were slaughtered. That is down 15,000 head versus a year ago, but up 1,000 head versus February. First-quarter slaughter is up just 5,000 head versus the same period a year ago. That means more cows stayed on the farm during the last month.

The Milk Production Report was issued from USDA NASS on Friday, April 18, 2008.

· Milk production in the 23 major states for March was 15.1 billion pounds, up 2.4 percent over last year.

· Milk production per cow increased 12 pounds over March 2007 with the 23 states average of 1,795 pounds.

· March cow numbers in the 23 major states was 8.44 million head.

The USDA World Ag Supply and Demand report was issued on April 9 that has All Milk price projections along with the ERS Livestock, Dairy, and Poultry Outlook report released on April 17 with the Class III milk price projections.

· All Milk price projections improved for all quarters of 2008. They were up 15 cents for the 2nd quarter, 20 cents the 3rd quarter, and up 95 cents for the 4th quarter. The All milk projections were below the class III futures contracts for all quarters of 2008 except for the nearby contracts of April and May 2008. The projections were from $17.10 for 2nd quarter of 2008 to $17.45 for the fourth quarter of 2008. This means that if you agree with USDA, then you could forward price your milk using options contracts when futures contracts are below the projections.

· The Class III Milk price projections ranged from $15.42 for the 2nd quarter of 2008 to $16.55 for third quarter of 2008. This in an decrease of $1.06 cents for the 2nd quarter of 2008 from last month, but up 26 cents for the 3rd quarter, and up $1.92 for 4th quarter of 2008 This is an increase of an average of 37 cents above the March 2008 projections.

· The Class III milk price projections were below all of the Class III milk futures through fourth quarter of 2008. When projections are above futures prices it would suggest using futures to lock in prices.

· You can compare the forward contract price offered with your milk buyer to the cost of placing a futures or option contract yourself.

The monthly USDA NASS Dairy Products report was issued April 4, 2008.

· February 2008 butter production was 147 million pounds, 13.7 percent below a year ago, but 9.4 percent above January 2008.

· Total cheese production for February 2008 was 784 million pounds, 3.5 percent below January 2008 but 4.8 percent above a year ago.

· American type cheese production for February 2008 was 319 million pounds, 4.5 percent above year ago but 4.4 percent below January 2007.

· Italian cheese production for February was 335 million pounds, 4.8 percent above last year but down 4.8 percent below January 2008.

· February Swiss cheese production was up 7.8 percent above last year but down 7.0 percent below January 2008. February 2008 Mozzarella cheese production was up 3.5 percent above last year but down 5.6 percent below last month.

· South Dakota total cheese production for February 2008 was 18.1 million pounds which is up 26.0 percent above last year but down 0.9 percent below January 2008. This includes Mozzarella, American, Cheddar and other cheeses.

The NASS Cold Storage report was issued April 21, 2008.

· The March 31st butter stocks in cold storage were 226.4 million pounds, up 8 percent over last month, and up 17 percent above last year. Of that amount, 196.8 million pounds were in public warehouses.

· Total cheese stocks in cold storage on March 31st were up 3 percent above last month to 822.8 million pounds but down 8 percent below year ago. Of that amount 452.6 million pounds were in public warehouses.

· American cheese stocks were 529 million pounds, up 3 percent above last month but down 7 percent below a year ago. Swiss cheese stocks were down 28 percent below last year anddown 5 percent below last month.

The monthly USDA Livestock Slaughter report was released April 25th, 2008.

· Dairy cow slaughter was up slightly in March to 215,000 head.

· Dairy Cow Slaughter for March 2008 was up 1,000 head over last month but down 15,000 head below a year ago.

Know your production costs per hundred pounds of milk produced to be able to use forward pricing alternatives to obtain a profit on your dairy farm. If you need assistance in calculating your unit cost ofproduction, contact your local Extension Office to set an appointment!

Watch for the next South Dakota Dairy and Milk Market Update the end of May 2008.