Central Valley dairymen are breathing a little easier this week as corn futures have been in a virtual free-fall over the past few days since USDA signaled there were ample supplies on hand,low demand and a good crop coming this summer.
Corn futures have declined about a dollar since last Thursday with May futures declining to $6.42 a bushel today.Corn jumped over $8 last summer as the extreme Midwest drought help drive future prices to record highs.
Prices in Chicago are down 23 percent since last year’s closing high of $8.3875 on Aug. 21.
Speculation has helped move commodity prices in wilder swings in the past few years many observers agree.
USDA is predicting farmers will plant 97.282 million acres this year, the most since 1936. Once the crop comes in – by September – future prices are now down to $ 5.51 bushel – closer to historical averages.
The reality is that a good moisture year will be needed in the Midwest for that to happen.So far this Spring moisture has been good in many parts of the corn belt.
California milk producers import the majority of their feed from the Midwest.
Livestock owners have been hurt hard by the drought last summer that helped drive increasing numbers of families out of the business in places like Kings County – where milk production has fallen by more than 9%.
Corn costs are the biggest expense dairymen face.The high price of corn also whipsawed all livestock owners as well as ethanol makers who rely on the feedstock to make biofuel.The record cost has idled scores of plants.
Too Early To Celebrate
Western United Dairymen president Tom Barcellos says it’s “too early to celebrate.We need relief on feed costs and on the milk price that needs to go up – to get a decent margin.”
Barcellos says that California producers are focusing on changing the milk marketing through a federal order instead of the state although they have not given on trying to change the California system through AB31.
Barcellos, who farms near Tipton, says milk volume is up this week as dairy cows enter the Spring Flush period when good weather boosts milk production.