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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

A jump in grain and sugar prices as well as increases in oils/fats drove a July surge of the United Nations Food Price Index (FFPI), although it remains well below the peak reached in February 2011, the UN’s Food and Agriculture Organization (FAO) said Thursday.

Following three months of decline, the index surged in July – the hottest month in the continental United States on record, according to the National Oceanic and Atmospheric Administration.

The oppressive Midwest drought – the worst in 56 years – has contributed to the surge as well, pushing global corn prices up by nearly 23 percent in July and setting records in the United States. On Tuesday MeatingPlace reported the Obama Administration announcement of drought-assistance measures, including nearly $16 million in financial and technical assistance to immediately help crop and livestock producers in 19 states.

The World Agricultural Supply and Demand Estimates (WASDE) from the United States Department of Agriculture(USDA) were release Friday morning with few surprises. Yields were slashed and high prices are projected to ration commodities to those most willing to pay higher prices.

U.S. wheat supplies for 2012/13 are raised 54 million bushels with higher forecast production and an increase in projected imports. Production is forecast 44 million bushels higher with increased yields for winter wheat, durum, and other spring wheat. Feed and residual use is projected 20 million bushels higher, reflecting the tighter supply situation for corn. Ending stocks for 2012/13 are projected 34 million bushels higher.

The projected range for the 2012/13 season average farm price is raised substantially to $7.60 to $9.00 per bushel, compared with $6.20 to $7.40 per bushel last month, as tighter foreign wheat supplies and sharply higher corn prices raise price prospects for the remainder of the marketing year.

Cattle prices are reduced from last month with the expectation of larger fed cattle marketings in both 2012 and 2013. However, prices are likely to remain strong in 2013 as total meat supplies are tight. Beef production is raised from last month for both 2012 and 2013 due to higher expected placements in feedlots and increased dairy cow slaughter in late 2012 and during 2013. Carcass weights are forecast higher based on recent weight trends, but higher feed prices are expected to temper the increase and carcass weights are expected to be lower in 2013 compared to 2012.

Milk production forecasts for 2012 and 2013 are reduced from last month as higher forecast feed prices are expected to pressure producer returns and encourage a more rapid decline in the cow herd. Milk per cow is also reduced due to tighter feed supplies.

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