WASDE

http://www.usda.gov/oce/commodity/wasde/latest.pdf


Today USDA released its latest World Agricultural Supply and Demand Estimates (WASDE)report.

WASDE stated: “Milk production is forecast higher for 2011 based on higher-than-expected January 1 dairy cow and dairy replacement heifer estimates."
This seems to be an inability to connect the dots in this report. For corn, a primary component of dairy grain mix, WASDE stated:

“U.S. corn ending stocks for 2010/11 are projected 70 million bushels lower this month with higher expected food, seed, and industrial use. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.”

Corn trading on the Chicago Board of Trade (CBOT) and near or over seven dollars a bushel for all three trading periods. The July 2011 corn price was $7.12 per bushel.
Ethanol futures soared to the highest price since July 2008, March 2011 ethanol futures closed at $2.457 a gallon. One bushel of corn is required to make about 2.75 gallons of ethanol. Recently, in America's cornbelt, the average ethanol distillery has been losing about nine cents per gallon.
So, with grain prices rising with apparently no end in sight, the prediction of increased milk production for 2011 is questionable.

Corn COT

(Click on image to enlarge)

Corn prices fell today. What next. If the CFTC's Commitment of Traders (COT) report carries any meaning, on the commercial side there are a lot of shorts. That should mean prices should continue to drop.. We'll see.

Corn & Soy

Today, corn futures for July 2011 rose to 628 cents per bushel. soy bean for May 2011 rose to 1396.6 cents per bushel.

Who really knows who owns the land those crops are harvested form, but farmland price are booming:

DES MOINES, Iowa (AP) — Increased commodity prices and strong demand have sent prices of farmland skyrocketing, making it more difficult for young and beginning farmers to get established but strengthening the balance sheets for those who own the land.

Across the Corn Belt, the price of farmland was on the rise in 2010. The highest increases were seen in Iowa, where values rose 13 percent and an acre of farmland sold for upward of $7,000 in some areas of the state. Minnesota and Wisconsin also saw double digit increases in farmland value, averaging 12 percent and 11 percent respectively, according to the Federal Reserve Bank in Kansas City.

more at: http://napervillesun.suntimes.com/business/3039967-420/farmland-prices-percent-farmers-commodity.html

Dairy farmers turn is right around the corner - or something like that.

People Have To Eat

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The above graph, plus the current price of corn says we are heading for a cliff.

In America, the food system runs on corn. Even dairy is heavily dependent on corn. Although there are some grass based dairies, the larger operation providing the most milk all go heavy on grain, particularly corn.

So what does $6 corn mean? There seems to be little wiggle room. The retailers have no room to raise prices. At the same time the per capita beef is the lowest since 1952. Pork is about the same.

A the production level dairy, including the support business are bleeding badly.

Needless to say, the bulk of the public is in trouble financially. Can most of the public pay more? Can dairy farm margins be less - NO.

Is there any leadership - NO.