MONROE - Corn prices, pushed to record highs just a month ago by predictions of a small harvest, bring a mixed bag of news for area dairy and crop farmers.
Corn market prices backed off slightly last week, in anticipation of the USDA's September forecast, according to Fairy Elmer, a marketing consultant, local dairy farmer and owner of Risk Management Services, LLC, Albany. The USDA numbers were released Monday.
However, the USDA numbers were not unexpected, she added, and the markets responded accordingly. The numbers were a little lower than previous estimates, the yields did not drop as much as feared, and the market demand for corn came back.
"The market went back up, adding nine cents to December corn to close at $7.45," she said late Monday. Dairy prices came back also, she added.
Total corn production could be the third largest on record for the United States, but average yields per acre are expected to be the lowest in the nation since 2005, according to the USDA report. The September forecast for the nation's corn production at 12.5 billion bushels is down about 3 percent from the August forecast, but still up a fraction from 2010.
Based on conditions as of Sept. 1, yields are expected to average 148.1 bushels per acre, down 4.9 bushels from the Aug. 1 forecast and down 4.7 bushels from 2010.
Mark Mayer, UW Extension agriculture agent for Green County, expects local corn yields to range between 150 to 160 bushels per acre. The five-year average is about 160 bushels per acre.
The price of corn was hitting record highs, almost $8 bushel, a month ago, but any profits farmers can make this year will go back into replenishing the losses - and paying down debts - accumulated in the past three years, when milk prices were low and input prices were high, Elmer said.
"They're not getting rich. Land and rent prices are going up. Fertilizer costs go up no matter what. Input is a big unknown," she said.
Many local dairy farmers, like Elmer, lock in the price for their future purchases of items, such as fertilizer, to help anticipate and control production costs.
Growing grain for their own dairy herds also saves some costs, sometimes as much as $2 to $3 per bushel for corn at current prices, according to Elmer.
But in California, for example, many dairy operations do not raise crops and purchase all their feed.
"California is in a deeper hole," Elmer said.
Some farmers around the nation are hurting because of droughts or floods, something that Wisconsin has managed to dodge this year.
"Wisconsin has better crop reports than any other state," which is an advantage to dairy farmer growing their own crops, Mayer said.
In areas of drought, farmers are shipping in feed and getting a lower milk price at the market, he added.
The high price of corn is making the option of getting out of the dairy industry more tempting, according to Mayer.
"Corn is a main driver of feed costs, and feed costs make up about 70-80 percent of production costs," he said.
As dairy farmers continue to age, they are reconsidering the work involved with milking twice every day and moving toward cash crops.
"They are keeping the land and getting rid of the dairy cattle," Mayer said.
In the past 20 years, the number of dairy farms in Green County has fallen from about 600 to slightly more than 300, and the number of dairy cows has dropped as well, from 50,000 to 31,000.
Mayer is concerned about the future of the dairy industry.
"2012 is going to be more of a challenge," he said. "It doesn't look as good for dairy margins as last year."
Dairy is entering into the third year of a three-year cycle, which Mayer said has been consistent over the past nine years. In 2009 farmers were devastated, 2010 was a break-even year, and in 2011 they had record prices for Class 3 milk, he said.
"2011 has been profitable for dairy, but what scares me is the futures price for 2012," he added.
The futures price for 2012 Class 3 milk is sitting at about $17.80 to $18.80 per hundred weight, and farmers get about $1 to $1.50 more at the mailbox.
"But with the cost of production with the high price for producing corn, farmers need about $18 to $18.50 to produce a hundred weight," he said. "It's going to tighten the margins for next year."
Corn market prices backed off slightly last week, in anticipation of the USDA's September forecast, according to Fairy Elmer, a marketing consultant, local dairy farmer and owner of Risk Management Services, LLC, Albany. The USDA numbers were released Monday.
However, the USDA numbers were not unexpected, she added, and the markets responded accordingly. The numbers were a little lower than previous estimates, the yields did not drop as much as feared, and the market demand for corn came back.
"The market went back up, adding nine cents to December corn to close at $7.45," she said late Monday. Dairy prices came back also, she added.
Total corn production could be the third largest on record for the United States, but average yields per acre are expected to be the lowest in the nation since 2005, according to the USDA report. The September forecast for the nation's corn production at 12.5 billion bushels is down about 3 percent from the August forecast, but still up a fraction from 2010.
Based on conditions as of Sept. 1, yields are expected to average 148.1 bushels per acre, down 4.9 bushels from the Aug. 1 forecast and down 4.7 bushels from 2010.
Mark Mayer, UW Extension agriculture agent for Green County, expects local corn yields to range between 150 to 160 bushels per acre. The five-year average is about 160 bushels per acre.
The price of corn was hitting record highs, almost $8 bushel, a month ago, but any profits farmers can make this year will go back into replenishing the losses - and paying down debts - accumulated in the past three years, when milk prices were low and input prices were high, Elmer said.
"They're not getting rich. Land and rent prices are going up. Fertilizer costs go up no matter what. Input is a big unknown," she said.
Many local dairy farmers, like Elmer, lock in the price for their future purchases of items, such as fertilizer, to help anticipate and control production costs.
Growing grain for their own dairy herds also saves some costs, sometimes as much as $2 to $3 per bushel for corn at current prices, according to Elmer.
But in California, for example, many dairy operations do not raise crops and purchase all their feed.
"California is in a deeper hole," Elmer said.
Some farmers around the nation are hurting because of droughts or floods, something that Wisconsin has managed to dodge this year.
"Wisconsin has better crop reports than any other state," which is an advantage to dairy farmer growing their own crops, Mayer said.
In areas of drought, farmers are shipping in feed and getting a lower milk price at the market, he added.
The high price of corn is making the option of getting out of the dairy industry more tempting, according to Mayer.
"Corn is a main driver of feed costs, and feed costs make up about 70-80 percent of production costs," he said.
As dairy farmers continue to age, they are reconsidering the work involved with milking twice every day and moving toward cash crops.
"They are keeping the land and getting rid of the dairy cattle," Mayer said.
In the past 20 years, the number of dairy farms in Green County has fallen from about 600 to slightly more than 300, and the number of dairy cows has dropped as well, from 50,000 to 31,000.
Mayer is concerned about the future of the dairy industry.
"2012 is going to be more of a challenge," he said. "It doesn't look as good for dairy margins as last year."
Dairy is entering into the third year of a three-year cycle, which Mayer said has been consistent over the past nine years. In 2009 farmers were devastated, 2010 was a break-even year, and in 2011 they had record prices for Class 3 milk, he said.
"2011 has been profitable for dairy, but what scares me is the futures price for 2012," he added.
The futures price for 2012 Class 3 milk is sitting at about $17.80 to $18.80 per hundred weight, and farmers get about $1 to $1.50 more at the mailbox.
"But with the cost of production with the high price for producing corn, farmers need about $18 to $18.50 to produce a hundred weight," he said. "It's going to tighten the margins for next year."