Milk Prices - News & Analysis

How One Dairy is Using Embryos to Replace Jerseys With Holsteins

Thu, 23 Apr 2026 15:32:42 GMT

As milk markets evolve, some dairies are starting to pull back on Jerseys, driven by a combination of shifting milk pricing, weaker replacement demand and changing revenue opportunities beyond the bulk tank.

For some, that shift has meant leaning into crossbreeding to capture flexibility and hybrid vigor. For others, it has meant doubling down on Holsteins to produce more milk volume, capture stronger beef-on-dairy premiums and improve cull value. That has been the case for Triple G Dairy and LegenDairy in Arizona, where a closer look at whole-herd economics, not just components, has prompted a gradual move away from Jerseys and toward a more Holstein-focused system.

When Fairlife expanded into the state six years ago, it reshaped breeding priorities for several dairies. For Triple G Dairy and its sister operation, LegenDairy, the focus on higher components triggered a transition away from Jerseys and toward Holsteins.

(Skylar Gericke)

“When Fairlife came in, they said that they had their bottom line on components, and we needed to be above that number on protein and fat,” says Skylar Gericke, part-owner at LegenDairy. “We originally did not meet their threshold for components, but we are now well over past component tests from when we milked a mixed herd”.

At the time, the fastest way to raise components was to bring Jerseys into the system. Since then, genetics, nutrition and management improvements have helped the Holsteins catch up.

“When we built LegenDairy, we moved all the Jerseys to that location and focused the Holstein herd at Triple G,” Gericke says. “But now the Holsteins have come up in components. We’re around 3.3 protein and about 3.7 fat now. At this point, we’re really working toward a Holstein herd and phasing the Jerseys out.”

Looking Beyond Components

The decision to move away from Jerseys was not based on components alone. When Gericke evaluated the economics across the entire system, several factors began favoring Holsteins.

“We still ship milk to a fluid market,” Gericke says. “And with the way our Holsteins are milking today, I need to ship more hundredweights in order to spread that fixed cost.”

Additional revenue streams also played a role in the decision.

“The more and more you look into breeding, the Holstein cows are becoming more efficient,” Gericke explains. “And when you factor in beef-on-dairy calves, the beef calves have a $500 to $1,000 premium on them. Even culling those Holstein cows, you get another $300 to $400 per cow. So profitability wise, we’re better off Holstein.”

Replacement market signals reinforced that direction.

“There’s just no good market for Jerseys right now,” he says. “Everybody is either trying to get out or breeding them terminal.”

Read: Crossbreeding Gains Ground as Some Dairies Scale Back Jerseys

(Skylar Gericke)

How Embryos Are Reshaping the Herd

As the farm shifted away from Jerseys, LegenDairy used Holstein semen on Jerseys to create some crossbred animals. The focus was on high genomic Holstein bulls with strong udder and health traits.

“We went back through the bulls we had been using and looked at the calves that had already been genomically tested,” Gericke says. “From there, we picked the top performers based on udder traits and component levels, and those top three bulls were the ones we used on the Jerseys.”

But as Gericke dug deeper into the economics, he concluded that building a herd of more purebred Holsteins made the most sense. Embryo transfer became the main tool driving that change.

“We make our own Holstein embryos through IVF,” Gericke says. “It gives us control over the progress, and I like having that control.”

That approach has helped accelerate the shift toward a more uniform Holstein base by multiplying higher-end genetics and reducing reliance on natural turnover.

(Skylar Gericke)

Genetics Is a Long Game

While reproductive tools like IVF can speed up progress, genetic change still takes time to work through a herd.

“Once you start implementing a breeding strategy, you have to think long term,” says dairy consultant Jason Anderson. “Unless you’re selling your cows and buying a different breed, it can take five to seven years from the time you change the semen in the tank before that new herd is fully in place.”

That delay means breeding strategies must also align with milk markets.

“Having a clear understanding from your processor about what they want from your milk helps define your strategy,” Anderson says. “It’s important to know what they are looking for and how that fits with the breeding decisions you’re making on the farm.”

For Gericke, that long-term mindset is exactly why he has leaned into embryo transfer.

“We can make management changes pretty quickly, but genetics don’t move that fast,” Gericke says. “Embryos help us speed things up, but once you pick a direction, you still have to stick with it and let it play out in the herd.”

The Kansas Explosion: Cow Numbers Surge as U.S. Milk Production Climbs

Thu, 23 Apr 2026 17:31:08 GMT

The latest USDA Milk Production report paints a picture of an industry in the midst of a significant geographic and structural shift. Led by a massive surge in the High Plains, milk production in the 24 major states reached 19.6 billion lb. in March, a 2.4% increase over the previous year.

While the production increase is notable, the real story lies in the “where” and “how.” The U.S. dairy herd is expanding at a clip rarely seen in recent years, with cow numbers in the major states climbing to 9.18 million head — an increase of 188,000 cows compared to March 2025.

The Kansas Phenomenon

If there is a gorilla in the room in this report, it is Kansas. The Sunflower State has officially become the epicenter of American dairy expansion. In March 2026, Kansas saw a staggering 25.4% increase in milk production compared to the same month last year.

This growth is driven by a massive influx of cattle. Kansas cow numbers jumped from 187,000 head in March 2025 to 234,000 head in March 2026 — a net gain of 47,000 cows in a single year. This explosion suggests the state’s aggressive strategy to attract processing capacity and foster a pro-growth business climate is paying massive dividends. Large-scale operations are not just moving to Kansas; they are thriving there, leveraging the state’s access to feed and central logistics.

“I almost always look at cow numbers first because that’s going to tell us a lot about short-to-medium-term prospects,” Phil Plourd, president of Ever.Ag Insights says. “For March, the U.S. herd increased 8,000 head month-on-month and 187,000 year-over-year to a new 30-plus year high. That says we’re going to have plenty of milk for a while. And, while performance varies from region to region and farm to farm, prospective margins seem decent enough to keep things rolling.”

This 30-year high in cow numbers indicates that despite the volatility of the global market, U.S. producers are betting on growth. However, that growth is highly concentrated.

High Plains Powerhouses and Regional Shifts

Kansas isn’t the only state in growth mode. The High Plains and West continue to consolidate their positions as the industry’s heavy hitters:

Texas: Added 31,000 cows year-over-year, bringing its herd to 719,000 head and boosting production by 4.7%.
South Dakota: Continued its steady climb with a 6.9% production increase, supported by 15,000 additional cows.
Idaho: Reached 724,000 cows (up 24,000 head), with production rising 3.4%.

The Regional Retreat: A Tale of Two Coasts

The report also highlights a stark contrast: as the High Plains boom, the Pacific Northwest and parts of the Southwest are in retreat. Washington saw a significant 5.8% drop in production, losing 15,000 cows over the past year as regulatory pressures and changing land use take their toll. New Mexico also faced a decline, with production falling 3.2% as its herd shrank by 9,000 head. Even traditional strongholds like Pennsylvania saw a dip, with production down 2.3% and a loss of 12,000 cows. These numbers tell a story of a national dairy industry that is not just growing, but migrating toward regions where modern, large-scale infrastructure can be built from the ground up.

Efficiency Meets Scale

It isn’t just about more hooves on the ground; it’s about the brilliance of modern management. Production per cow in the 24 major states averaged 2,133 lb. for March, 7 lb. higher than a year ago. This marriage of scale and efficiency has pushed the January-March quarterly production to 58.5 billion lb., up 2.9% from the same period last year.

As the industry moves into the second quarter of 2026, the data confirms a new reality. The era of localized, fragmented production is giving way to a high-precision, geographically concentrated model. With Kansas leading the charge, the U.S. dairy industry is proving through innovation and strategic expansion, it can reach heights not seen in three decades.

A Conversation With Ag Secretary Rollins on Labor, Disease and MAHA

Thu, 13 Nov 2025 13:33:15 GMT

U.S. Secretary of Agriculture Brooke Rollins stuck to streamlining the federal government labor rules to alleviate dairy’s worker crisis and said more aggressive measures are coming to prevent and contain disease, in an interview with Dairy Herd Management. Rollins this week was at the joint annual meeting hosted by National Milk Producers Federation, the United Dairy Board and the United Dairy Industry Association in Arlington, Texas.

While there, she said the H-2A visa program is particularly broken for dairy, which requires year-round support instead of seasonal workers. She also said measures, such as mandatory testing for lactating dairy cattle prior to interstate movement, are not aggressive enough to address modern biosecurity threats.

Below is a summary of Dairy Herd’s 20-minute conversation with Rollins, who discussed labor, disease prevention as well as her feelings on the “Make America Healthy Again” movement.

What Federal Efforts Are in the Works to Ensure Adequate Labor for U.S. Dairies?

One of the central concerns among dairy producers, and the entire industry, is comprehensive immigration reform. To put it in perspective, more than two-thirds of today’s 9.36 million dairy cows are milked by immigrant laborers in the U.S., according to the National Milk Producers Federation.

Currently, the H-2A visa applies strictly to seasonal or temporary labor. Dairy operations, however, require consistent, skilled workers every day of the year. Milking and caring for cows, managing processing facilities and ensuring food safety are daily tasks that don’t pause between seasons. This mismatch leaves dairy farmers and processors nationwide without a legal means to fulfill their guestworker needs.

In addition to the need for year-round help, Secretary Rollins notes farmers must interact with three different federal agencies to use the H-2A program. Moreover, the costs associated with securing labor have significantly increased, with reports from farmers in south Texas indicating average hourly costs, including transportation and housing, reaching $30 to $35 per hour. Comparatively, similar labor across the border is $2 per hour, Rollins says, illustrating a system that is both unsustainable and inherently unfair.

Ideally, any H-2A program changes will reduce costs and red tape, but comprehensive solutions ultimately require congressional action.

In addition to visa programs, Secretary Rollins says the current administration remains focused on sealing borders and mass deportations.

“Everyone understands the dynamics of an open border, and the millions and millions, we’re unable to count how many, that crossed during the last administration. The President’s No. 1 promise as a candidate in 2022 through 2024 was sealing the border and mass deportations,” she says. “Looking at this challenge through the lens of understanding labor is absolute when we can’t feed ourselves, combined with where we are in terms of immigration, those are the nuances.”

How is the Administration Addressing Threats to Animal Ag?
On day 1, after being sworn in as Secretary of Ag, Rollins was briefed on HPAI . She made it clear that while some measures, such as mandatory testing for lactating dairy cattle prior to interstate movement , had been enacted, a broader and more aggressive approach is necessary. Recognizing that maintaining the status quo was insufficient, a comprehensive strategy was essential — not just from USDA but across the entire federal government.

“I realize there are lots of opinions on my boss, President Trump, but I think the one thing that most people would agree on is that he leaves it all in the field. And, that we have to do everything we can for this moment that we were given to fix a very broken system, whatever that system may look like, in this case, which is animal disease,” Rollins says.

In February 2025, the Trump administration set forth a five-point plan to combat HPAI . Rollins notes the dairy sector, in particular, showcased remarkable adaptability to HPAI threats, demonstrating industry resilience and proactive measures.

Significant investments, such as a $100 million innovation grant , have been allocated to explore vaccines and therapeutic solutions. However, the complexities of viral mutations necessitate caution, especially regarding vaccination strategies, to prevent potentially more dangerous strains from emerging.

“I think we’re going to make more progress than perhaps has been made. Having said that, it’s a virus and the virus always wins,” she says, noting they are worried about New World screwworm and took aggressive actions to combat that by closing several ports.

“We’ve not imported new animals, which is one of the reasons beef prices are up, but we are looking now to figure out how to start reopening ports. I think we’ve gotten our arms around exactly what the problem is,” she says. “We’re building out new sterile fly facilities, which is the only way we eradicated it 30 to 40 years ago, but we have a really good system in place.”

Rollins shares collaborations with international counterparts are stronger, creating an unprecedented partnership with Mexican authorities to manage and preempt future animal agriculture outbreaks effectively. Enhanced border protocols, including disinfection and ivermectin treatments for imports, underscore a commitment to protecting livestock health.

“I feel confident that we are aggressively attacking all pieces of NWS,” she says.

What Does the MAHA Movement’s Mean for Dairy?
The “Make America Healthy Again” movement aims to revamp the nation’s food system, and Rollins offers reassurance dairy products at the forefront.

“Health care costs too much. We’re not getting the care we need, especially to vulnerable populations. How do we fix that?” she asks. “Over the last year, it is completely flipped to, what are Americans eating? What are we serving in our schools? What are we serving in our SNAP program, which 42 million Americans are on the food stamp program.”

While the current economic situation is troubling, Rollins is confident in the long-term potential for profitability and sustainability in the dairy industry.

“What milk, cheese and other dairy products mean as we completely and fundamentally shift our entire food system is our dairy industry is at the very front tip of the spear,” she says, noting the response markets are answering and the dairy industry, too, with the $11 billion in new processing plants, U.S. dairy is riding a wave of momentum that is fueled by consumer demand.

“In the long term, I’m not sure there is an agriculture industry that has more to gain and that will see more of a pivot toward real profitability and real sustainability than this [dairy] industry. I could not be more excited to help lead on that,” she says.

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U.S. Dairy Herd Continues to Grow: Fastest Pace in 17 Years

Mon, 25 Aug 2025 20:52:17 GMT

Last fall, after more than a year of low dairy cow cull rates, U.S. dairy producers started to rebuild the milk herd. So far this year, dairy producers have held cull rates low enough to add milk cows at the fastest rate since 2008, says Sarina Sharp, analyst with the Daily Dairy Report.

“While the heifer shortage has remained acute this year, today’s herd is the largest in four years, but it’s also growing older,” Sharp says. “To fill every stall, producers are holding on to cows for an extra lactation or keeping cows whose milk yields are lower than desired because not enough heifers exist to replace less-productive livestock.”

In late-September 2023, U.S. dairy producers began to rein in cull rates, sending fewer animals to packing plants. At first, the lighter slaughter volumes were not substantial enough to offset the ongoing heifer shortage, and the U.S. dairy herd declined. The herd continued to shrink until January 2024, but as producers continued to hold onto lower-end cows, the decline in U.S. milk cow numbers ended, and the national dairy herd began growing again last autumn, Sharp says.

“Now the trade is watching closely for any sign that cull rates are climbing, which would foster slower growth in milk cow counts” she says.

For the first time since March, USDA’s weekly slaughter volumes regularly topped 50,000 head in July, and in the last two weeks of the month, producers sent more cows to packing plants than they did a year earlier. At first glance, rising slaughter volumes appear to indicate the situation could be changing, but a deeper dive shows otherwise, according to Sharp.

“The increases in cull rates can easily be explained by seasonality, mathematics and weather,” she says. “First, cull rates typically jump in July following spring flush. And while U.S. dairy producers are now milking 146,000 more cows than a year ago, slaughter volumes can top last year’s very low counts without boosting culling percentages.”

Over the past two decades, she explains, dairy producers have typically culled about 32% of the milk cow herd each year. Last year, the cull rate dropped to 29.6%. This year, with 146,000 more cows, producers could continue to cull less than 30% of the herd and still send nearly 1,000 more cows to slaughter each week.

In addition, while slaughter in late July was unusually high in the Midwest, a derecho that slammed into the Central Plains was likely a major driver of the increase. USDA data showed that slaughter in the Midwest jumped 2,400 head above the prior year in the final week of July.

“Powerful winds damaged facilities and forced some producers to send cows to the packer while they repaired barns and milk parlors,” Sharp says. “Eventually, health and longevity will necessitate a return to historical cull rates, but for now, economics suggest slaughter volumes will remain near year-ago levels and expansion will continue, leading to strong milk production.”

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U.S. Dollar Sees Worst Weekly Drop Since 1995

Tue, 11 Mar 2025 17:50:59 GMT

After a week of trade war headlines, dairy markets started the week on a quiet note. What little action there was showed buyers willing to own NDM and cheese at these levels. Class III futures opened around a dime down with fears that last week’s headlines may continue. Last week, the U.S. dollar had the worst week-to-week performance since 1995 and that, combined with global dairy price premiums, should spark some export interest and support domestic prices.

Today’s Highlights from Ever.Ag’s Know Your Markets

CME barrels dropped another 2.5 cents today, settling at $1.6050 per pound, the lowest price since December. Spot blocks gained some ground, rising to $1.6325, a penny gain. Five lots of blocks and one of barrels traded. The only other movement was in spot NDM, which ticked up a quarter cent to $1.1575 per pound, with three loads exchanged.

Dairy futures didn’t see any major drops or increases today. Second quarter Class III declined to $17.37 per hundredweight, down a nickel to the life-of-contract low set last Thursday.

Tomorrow brings USDA’s March World Agricultural Supply and Demand Estimates report. Analysts are predicting a small decrease in world corn ending stocks and a slight increase for soybeans. Ahead of that report, nearby corn futures lifted 3.5 cents to $4.5875 per bushel, while soybeans dropped to $9.9975, a 10.5-cent loss.

Ever.Ag - The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.

Dairy’s Gold Rush: Replacements Heifers and Beef-on-Dairy Calves

Thu, 13 Feb 2025 15:47:08 GMT

The dairy cattle market is currently experiencing an unprecedented surge in demand, creating a bustling atmosphere in the industry. As the competition heats up, market players are closely observing what is currently trending – is it beef-on-dairy calves or the traditional dairy replacements and fresh cows?

The answer is both, as beef-on-dairy calves are going for astronomical prices. But, according to recent insights from TLAY Dairy Video Sales, dairy replacement heifers and fresh cows have become an exceptionally hot commodity.

By hosting an online video auction on the first Friday of every month, TLAY Dairy Video Sales have established a platform where semi-loads of dairy cattle from across the U.S. find their rightful owners. Jake Bettencourt, the manager of TLAY Dairy Video Sales, stressed the intensified demand for cattle.

“In 2025, we see a completely different landscape compared to previous years,” Bettencourt explains.

Prices that seemed stable in 2022 and 2023 have now skyrocketed. Illustrating this point, Jersey springers, previously ranging between $1,400 and $1,500, have leaped significantly, affecting the cost-effectiveness of replacements.

Unpacking Current Price Trends
This evolution in market prices is evident in the recent results from TLAY Dairy Video Sales:

• Jersey fresh heifers command prices from $2,900 to $3,100.

• Jersey cross fresh heifers average between $3,100 to $3,200.

• Holstein springers average between $3,350 to $3,700 (many carrying beef-on-dairy cross calves)

• Jersey springers $2,850 – $3,000

• Holstein fresh cows range from $3,600 to $3,775.

• Mid-lactation, confirmed pregnant Holstein cows fetch around $3,500.

Bettencourt points out a growing trend: cows carrying beef-on-dairy calves are realizing more value than those carrying sexed calves.

The Nationwide Dairy Heifer Inventory Crunch
In addition to the heated demand, the nationwide dairy heifer inventory is under significant strain. The recent USDA annual Cattle report underscores this scenario, revealing a critical shortage in the available dairy heifers as of January 1. Despite a slight upward adjustment in 2024 estimates, the inventory remains the lowest since 1978 with only 3.914 million head available – a 0.9% decrease from the prior year.

This scarcity is further exemplified by the high prices fetched by two loads of Holstein open heifers at 475 lbs., that were sold off by TLAY, each bringing between $1,800 and $1,850. And a load of Jersey open heifers from Oregon at 410 lbs. sold for $1,625 each and one load of Jersey open heifers from Idaho sold at 600 lbs. at $1,825.

Market Predictions and Insights
Phil Plourd, president of Ever.Ag Insights, says that the USDA’s Cattle Report published last month underscored what we all knew—and that is we don’t have a lot of heifers on hand. The ratio of replacements to milking cows is at 41.9%, the lowest level since 1991.

However, Plourd points out that financial incentives to the producer haven’t changed.

“It’s a classic ‘bird in hand versus two in the bush’ situation. In this case, the bird in hand is something like $900 for a day-old beef calf. That still strikes producers as a better deal than the risks and uncertainties of raising a dairy heifer. The beef situation isn’t any different, either, with the Cattle Report showing the smallest beef inventories since 1961 and all-cattle and calf inventories since 1951. The whole situation is one of the more intriguing mysteries I’ve seen in the 25-plus years I’ve been hanging around the dairy industry,” he says.

The dairy industry’s landscape is an intriguing blend of challenges and opportunities. As Plourd anticipates, changes might arise as beef and dairy producers opt to retain 5% to 10% more heifers, providing a buffer even if incentives do not align. Navigating this intricate scenario requires a keen understanding of evolving market conditions and strategic foresight. As the industry moves forward, these shifts promise to dictate the path ahead for dairy cattle stakeholders.

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The Big Reveal from the Latest Milk Production Report

Wed, 28 Aug 2024 14:16:43 GMT

The latest USDA Milk Production report for July reflects a continuing downward trend, echoing the declines that milk production reports have consistently documented month after month in 2024. While this may seem like a case of “been there, done that,” a deeper dive into the data reveals some surprises worth noting.

Surprising Revisions in June Figures
Phil Plourd, president of Ever.Ag Insights, pointed out particular states where the milk production figures were revised downwards more substantially than anticipated. States such as Colorado, Idaho, and Iowa, which have been dealing with Highly Pathogenic Avian Influenza (HPAI) outbreaks, saw significant drops, including:

Colorado: Revised to -3.7% from an initial -1.1%
Idaho: Revised to -2.8% from an initial -1.0%
Iowa: Revised to -1.6% from an initial +1.2%

From a market perspective, Plourd expressed uncertainty about the implications of these revised numbers.

“I don’t know for sure, but looking at this list, some of the states that dropped lower seemed to be states that, anecdotally, were dealing with HPAI outbreaks,” Plourd reported. He added, “From a market perspective, I’m not sure what we do with the knowledge that things in June were worse than initially believed.”

Cow Numbers: A Glimmer of Hope?
While milk production has faced challenges, the situation with cow numbers offered a more nuanced picture. According to Plourd, despite light slaughter numbers, there was an increase of 3,000 head in cow numbers for the month. He noted that the current economic conditions are favorable for production, suggesting that eventually, weather conditions will cooperate more universally. Plourd shares that the U.S. dairy cow story may be more interesting, as slaughter is running light.

“The big questions is how much we can really grow milk production given how tight we are on animals,” Plourd asks.

Detailed Production Figures
The USDA reported that July milk production in the 24 major states totaled 18.2 billion lbs., down 0.2% from July 2023. The revised production figures for June stood at 17.9 billion lbs., down 1.5% from June 2023—a revision indicating a decrease of 137 million lbs., or 0.8% from last month’s preliminary production estimate.

Production per cow in the 24 major states averaged 2,047 lbs. for July, which is 2 lbs. above July 2023. The number of milk cows on farms in these states was 8.88 million head, 31,000 head less than July 2023, but 3,000 head more than June 2024.

Furthermore, New Mexico experienced the largest decline, down 48 million lbs. (-8.9%) and 31,000 head to 491 million lbs., while South Dakota gained 29 million lbs. (+7.4%) to 420 million.

Will the Decline in Dairy Culling Continue?

Fri, 02 Aug 2024 19:39:48 GMT

Fewer cows went to their local sale barns in the month of June compared to months prior. In fact, through July 13, USDA Ag Marketing Service estimates indicate the number of dairy cows marketed for beef has now trailed year-ago levels for 45 consecutive weeks, dating back to Sept. 9, 2023, and was down about 332,000 from the same period a year earlier.

Phil Plourd, president of Ever.Ag Insights, attributes the slowdown in dairy cull cow marketing to several factors, including a smaller milking herd, limited availability of replacement heifers to maintain full barns and slight improvements in milk income margins.

“I believe the low slaughter figures reflect at least two different realities. First, we don’t have a lot of replacements and the ones we have are expensive. Second, I think that prospects for better margins are likely slowing the slaughter pace. If that’s true, I am curious to see the effect on productivity,” he says.

Robin Schmahl with AgMarket.Net says he believes culling will continue.

“It may not be lower month-to-month, but it will be lower than the previous year,” he says, noting that producers have been culling heavily for quite some time leaving fewer cows to be culled

However, Schmahl shares that two other factors are the greater issues.

Beef-on-dairy interest has generated a significant source of income for dairy producers. “This has limited the need to cull cows aggressively to add to income,” he says. “These calves bring substantially better income than dairy calves adding significantly to the farm’s bottom line. Many of my clients are breeding 50% of their herds to beef bulls. This leaves sufficient replacements for the dairy but does not allow for any to be sold as replacement heifers resulting in a tight heifer market and high prices. This also increases the desire to hold onto cows as replacements are difficult to find. This will continue as long as beef prices remain strong.”

Continued Lower feed prices. “The outlook is for continued low feed prices through the end of this year and into next year,” Schmahl says. “This lowers the bar for cows that may need to be culled.”

Schmahl highlights the year-over-year decline in grain prices that are welcoming to dairy producers, allowing for better margins.

- The average price for corn in June 2023 was $6.49 per bushel while the average price in June 2024 was $4.48 per bushel.

- The alfalfa hay price in June 2023 was $263 per ton compared to $195 per ton in June 2024.

- The All-milk price in June 2024 was $22.80 compared to last year when it was $17.80.

“This all lowers the bar of profitability for milk production per cow,” he says. “Cow numbers remain below a year ago but are slowly narrowing the gap. We should see reduced culling as long as these aspects remain in place.”

How We Saved a 600-Cow Dairy Farm in 6 months

Wed, 29 May 2024 20:10:53 GMT

The bank had given them 6 months.

If they could not turn things around, this family would be losing their dairy farm and their house too.

Their lender advised them to liquidate immediately. But they called me instead.

When I arrived at the 600-cow dairy, the first thing I did was comb through their expenses for red flags, and I found one right away. They were spending a lot of money on medicines. With this information in mind, I headed out to the barn to talk with the herdspeople. They identified the fresh cows as a high concern, based on the amount of time and treatments happening in that area.

Often times, I see overtreatment as the result of a bigger issue: Feed. Whether it’s poor quality forage or failure to keep the bunk full, nearly every troublesome fresh cow issue starts right here. On this dairy, there were times during the day when the bunk was completely empty. Being more diligent and consistent on feed delivery alone as a game-changer.

Once these fresh cows didn’t have to wait around on an empty belly, things started to turn around quickly. Fewer cows needed to be treated, and that resulted in not only more milk, but also less need for time and money spent treating animals.

These changes allowed us to assess labor efficiency as well. Upon freshening, cows were moved to a pen where they would stay for their entire lactation. That meant each pen was a mix of fresh cows and all other stages of lactation.

We made the change back to more traditional pen management by putting all fresh cows in a group pen together. Herdspeople now had fewer cows to treat, and they could also get their job done faster. We rearranged other groups so that cows needing to be bred were in the same pens. We also put late lactation cows together, which allowed us to hone in on the ration and remove some of the more expensive feed ingredients they did not need.

All together, between these big changes and other smaller ones, we were able to help this dairy farm go from 6 down to 4 full-time employees, increase milk and reduce their expenses.

By the end of 6 months, this dairy had gone from losing $500,000 a year to actually breaking even.

And more importantly, they still have their home and the dairy farm.

Fewer Cows are Being Culled, Here's the Main Reason Why

Wed, 01 May 2024 13:52:02 GMT

There has been much anticipation that culling would increase significantly due to continued low milk prices. Milk prices have been low for an extended period, but culling has not reduced cow numbers as anticipated. There have been farms exiting the dairy business with a substantial number of them due to smaller farms selling out because many have reached an age where they have decided to retire. Many do not have family members that wish to continue the dairy farm. Many of those cows have moved to another operation and the plant space is being assumed by another farm that wishes to expand. It is known that cows raised in a tie-stall barn often cannot adapt to a free-stall barn, making that generally not a good fit. However, cows continue to move from one farm to the next.

Cow numbers have been declining with the U.S. dairy herd totaling 9.334 million head in March, a decline of 98,000 head from March 2023. This was 12,000 more cows than there were in January. Cows are being held onto more willingly due to the expensive heifer replacements. Over the past few years, the bar has been raised with many of the cows on dairy farms maintaining high milk production leaving fewer to move to the slaughter plant.

The March Milk Production report showed a decrease in cow numbers of 7,000 head after increasing by 9,000 head in February leaving cow numbers somewhat steady so far this year. One reason we may not see dairy cattle slaughter as high may be due to the beef-on-dairy trend. More dairy cattle are being bred with beef to increase the value of the calves and generate greater farm income. This leaves fewer dairy cattle that will be sent to the market.

This is evident when looking at the Livestock Slaughter reports. The March report showed dairy cattle slaughter down from February and substantially lower than March 2023. March dairy cattle slaughter totaled 244,600 head, down 8,100 head from February and 61,600 head less than a year ago. This is the lowest slaughter for March since 2009. So far this year, monthly dairy cattle slaughter has been significantly below the previous 4 years.

(Farm Journal)

It will be interesting to see what the rest of the year brings, especially if milk prices improve as the year progresses. Current Class III futures indicated prices may be somewhere in the $18.00 range with Class IV contracts in the $20.00 to $21.00 range.

For more industry news, read:

Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com .

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. There is risk of loss in trading commodity futures and options on futures. It may not be suitable for everyone. This material has been prepared by an employee or agent of JSA and is in the nature of a solicitation. By accepting this communication, you acknowledge and agree that you are not, and will not rely solely on this communication for making trading decisions.

Beef-on-Dairy Impacts the Overall Dairy Heifer Discussion

Thu, 18 Apr 2024 20:08:11 GMT

While spring has arrived, higher milk prices have not. The immediate concerns on most producers across the U.S. is just how long low milk prices will continue.

Independent dairy financial advisor, Gary Sipiorski, says producers are trying to find ways to lower expenses without impacting herd health or milk production. He shares that producers need to revisit their heifer inventory and calculate just how many heifers they will need in the coming year.

“They cost $2,200 to raise or more,” Sipiorski says. “Beeding for beef right now is paying up. Some producers are even thinking of selling all their heifers. That is a serious decision.”

The high prices of beef are boosting dairy producers bottom line, as week-old beef crosses are going for a pretty penny. Sipiorski says producers are now trying to decide how long they should keep a cow.

“Three, four, five lactations,” he says. “These cows are paid to produce a lot of milk, however, they are still worth a lot of money as beef. And, you cannot afford to have any of them to die on the farm.”

At the Dairy Calf & Heifer Association Annual Meeting in Westminster, Colo., Dr. Geoff Smith, dairy technical services veterinarian with Zoetis, says that beef on dairy has been a blessing and a curse to dairy producers.

“It has been a blessing for many reasons, the biggest one being the extra income it has brought to dairies,” he says. “Many farms have fallen so in love with producing beef-on-dairy that they don’t have the number of replacement heifers needed. And they’re not able to make proper culling decisions because they don’t have the numbers of replacements in the pipeline.”

Although, according to Jim Salfer with University of Minnesota, producers do not seem to have an appetite for increasing the number of heifer calves that they are raising.

“A lot of it is because of the cash flow situation on farms and the extreme value of these crossbred calves,” he says. “Most of the farms that I work with have no appetite for even raising a few extra heifers.”

Salfer points out that highly pathogenic avian influenza (HPAI) will be crucial to watch to see if that results in additional culling.

“One other potential fly in the ointment is if states start restricting movement because of the HPAI breakout,” he says. “It seems like mortality levels are low, so that may not be likely.”

Low milk prices force producers to calculate how to generate extra profit and many have found through beef-on-dairy and cull cows checks. The key for producers going forward will be maintaining the right number of lactating cows going through the parlor and ensuring the right number of replacement heifers can keep that pipeline full. This is an on-going conversation that will continue to unfold as long as the beef market stays hot.

Check Out These Beef-on-Dairy Stories:

High Plains Dairy Conference Set March 5-6 in Amarillo

Mon, 08 Jan 2024 15:41:43 GMT

The High Plains Dairy Conference will be March 5-6 in Amarillo. Conference chairs expect about 300 dairy industry representatives from across the U.S. to attend.

Robert Hagevoort, Ph.D., co-coordinator and Extension dairy specialist at New Mexico State University Ag Science Center in Clovis shared that the conference will kick off with a dynamic panel examining the global dairy industry and future market outlook.

Hagevoort also shared that given the current economic challenges of the conventional dairy model, the conference will explore alternative revenue streams, the future of exports and much more.

Agenda

Will exports continue to lead the way, Krista Harden, president and chief executive officer, U.S. Dairy Export Council.

Can dairy become more than a low-cost leader, Paul Ziemensky, Group EVP, Wellness, Insights and Innovation, Dairy Management Inc.
Beef on Dairy is what’s for dinner: a focus on the end product, Dale Woerner, Texas Tech University.

A total of four panels and 15 talks at the High Plains Dairy Conference will provide industry insight and producer perspectives. New this year is a student poster presentation, that will highlight ongoing research at regional universities.

Middle Managers Workshop

On Thursday, March 7, the High Plains Dairy Conference brings yet another new event hosted in both Spanish and English. A 5-hour middle managers workshop focuses specifically on front-line supervisors and the challenges they face advancing from managing cows to managing people and deals with topics such as effective communication, effective training and education, team building synergies, conflict resolution, scheduling, and other topics. As you return home on Wednesday, send your middle managers on Thursday for a continued educational event.

The full agenda and registration are available at High Plains Dairy Conference

Will the Dairy Economy Rebound by 2025?

Thu, 28 Sep 2023 14:18:05 GMT

The dairy economy is in rough shape. This is what Ken Bailey, PhD shared with a group at the Dairy Financial and Risk Management Conference earlier this month in Harrisburg, Pa. Bailey has devoted his entire career to the economics of the U.S. and global dairy industries.

Bailey shared with the dairy audience that the Federal Reserve has tightened down on the economy, raising interest rates to cause enough of a strain to push towards a slowdown. He said that the U.S. dairy market is hampered by suppressed demand, both at home and abroad.

“The Conference Board forecasts that the growth seen in many parts of the economy will gradually buckle under mounting headwinds later this year, leading to a very short and shallow recession,” Bailey says. “This outlook is associated with numerous factors, including elevated inflation, high-interest rates, dissipating pandemic savings, lower government spending, and the resumption of mandatory student loan repayments. We forecast that real GDP growth will slow to 1.9% in 2023, and then fall to 0.5% in 2024.”

The Federal Reserve’s goal is for 2% inflation. Although, inflation posted its biggest monthly increase this year in August as consumers faced higher prices on energy and a variety of other items.

The consumer price index, which measures costs across a broad array of goods and services, rose a seasonally adjusted 0.6% for the month, and was up 3.7% from a year ago, the U.S. Department of Labor reported . The Wall Street Journal reports that mortgage interest rates hit 7.09%, the highest in 20 years and says that “would-be buyers are locked out and would-be sellers are staying put.”

Slowed Demand in China

All of the above has caused the food price indexes calculated by the Food and Agriculture Organization of the United Nations (FAO) to decline in 2023. Bailey says that a decline in global demand is a major factor contributing to price decreases. In fact, global dairy prices have been declining since 2022. This is especially concerning, as China’s economy is expected to slow. The U.S. Dairy Exporter blog reports that the U.S. low-protein whey exports to China dropped 21% year-to-date and that decline continued in July with exports falling 46% to the lowest monthly levels in 18 months.

The U.S. Dairy Exporter blog reports that “the fall in whey exports to China largely reflects weaker demand in the feed sector.”

“There’s a lot of other factors in China,” Bailey says. “The bottom line is they’re making a little bit more milk and their economy is slowing down. Their ability to buy dairy products has slowed now the U.S. isn’t radically dependent on China dollars on cheese or the skim powder they buy.”

U.S. Milk Production

When it comes to milk production in the U.S., Bailey reports that farm milk production for the first half of 2023 is even with a year ago. He shares that “economics does not favor an expansion,” but says that component production continues to rise above year-ago levels.

“Demand is down, and farmers are delivering more than enough components to meet market needs,” he said.

Bailey shared that milk production has slowed down in response to summer heat and lower prices.

“Some of this milk production slowdown is being offset by high component levels,” he says.

“Milk fat is increasingly ending up in cheese and butter production. Slower exports are overhanging the market, especially for dry protein. The EU is exporting more cheese and more butter to New Zealand. All of this is adding up to lower U.S. milk prices for the foreseeable future.”

The all-milk price has declined from $27 per cwt. in April 2023 to a low of $18 per cwt. by June.

“The all-milk price is forecast to reach $21 per cwt. by September 2023,” Bailey shared. “Higher prices will come when domestic and global demand resurges in 2025.”

China’s Weakening Economy Spells Trouble for Dairy

Wed, 26 Jul 2023 20:19:02 GMT

China’s economy has slowed significantly, which does not bode well for global dairy prices. The country’s second-quarter GDP grew 6.3%, compared to the same quarter in 2022, which was still smaller than analysts expected. The number was sobering, considering that second-quarter GDP last year grew by only 0.4%, which was the second smallest growth rate in the past 10 years, according to Betty Bering, analyst with the Daily Dairy Report. The lowest GDP reading occurred in 2020 during the height of the pandemic. If GDP slows much further, the country could miss its 2023 GDP goal of 5%, which is already considered modest, she said.

“China has been importing fewer dairy products driven in part by its faltering economy,” Bering said. “Dairy demand in the country has sputtered despite the Chinese government’s efforts to try to restart its economy following its severe Covid-19 lockdowns. While the Chinese economy began to rebound in December 2022 as pandemic-era controls were lifted, it weakened in recent months. Other economic data points also suggest trouble is brewing in China, and shrinking demand for dairy could temper global dairy prices for some time to come.”

Chinese exports have also waned. Year-over-year exports from China fell 12.4% in June after declining 7.5% in May. The country’s real estate crisis also persists. CNN noted that earlier in July China extended measures it implemented in 2022 to stimulate its real estate sector, which makes up 30% of the country’s GDP. According to the New York Times, in Nanchang, nearly 20% of the homes are vacant, the highest rate of vacancy among 28 large and midsize Chinese cities.

Looking at Chinese dairy imports, whole milk powder (WMP) purchases rose 37.6% in June, compared to the previous year, to nearly 105.6 million pounds, according to Trade Data Monitor. Following a dismal first four months for WMP imports, June’s significant increase marked the second consecutive month of growth compared to the prior year, Berning said. However, year-to-date through June, China’s WMP imports of 610 million pounds trailed the same period in 2022 by a whopping 45%, or nearly 500 million pounds.

“With a 90% market share, New Zealand has borne the brunt of the decline in WMP imports, and tepid Chinese demand has been cited as a critical reason for low milk prices in the 2022-23 and 2023-24 seasons,” Berning noted.

Chinese imports of ultra-high temperature milk (UHT) were down in every month this year on a year-over-year basis. Imports of UHT milk declined by more than 17% in June. China’s skim milk powder imports have held up better than WMP and UHT milk. Through June, year-to-date imports at 460.4 million pounds were up nearly 21% compared to last year. In June, China’s SMP imports of 63.6 million pounds climbed a hefty 20% above June 2022 but fell short of June 2021 imports of 75.5 million pounds.

Looking a bit longer-term, Berning said China’s population could have reached a tipping point, with the birth rate falling and death rates inching higher as the population ages. While China will continue to be a huge market for dairy commodities, its importance could lessen particularly if the country continues to pour money into its own dairy industry, she added.

High Beef Prices to Encourage On-Going Dairy Culling

Mon, 26 Jun 2023 13:00:00 GMT

High input costs, falling milk prices amid surplus supplies, and high beef prices will continue to encourage dairy producers to cull heavily until milk margins improve. Surplus milk supplies are so heavy in some regions that producers have had no alternative but to dump milk or basically give it away, according to Sarina Sharp, analyst with the Daily Dairy Report.

“Poor margins are taking a heavy toll on dairy producers, and milk futures project even harder times ahead,” Sharp said. “Some loads of milk are being sold for little more than the freight required to haul it from the farm. For these producers, deductions will result in mailbox milk prices far lower than the milk futures market currently projects.”

Since mid-month, the June 2023 Class III futures contract has been trading below $15/cwt. If that value were to hold, it would mark the lowest Class III price since May 2020, during the height of both the pandemic chaos and the spring flush.

“At the same time, the cost to make milk is near an all-time high, multiplying on-farm losses,” Sharp said. “The markets are all but shouting at dairy producers to rein in milk production, and high beef prices are amplifying the message.”

According to USDA, U.S. beef production will fall 4.2% this year and decline another 8.4% next year to a nine-year low.

“For years, drought in the Southern Plains forced cattle producers to trim their herds to levels their parched pastures could support,” Sharp said. “Now that the rains have finally come, they have begun to hold onto heifers and cows to rebuild inventories. But that means fewer cattle are destined for slaughter.”

Meatpackers have been looking for cattle ready to harvest, and earlier this month, they were paying an average of $1.89/lb. for finished steers, an astonishing 34% more than the comparable period a year earlier.

High cattle prices have helped boost dairy cull cow values to multi-year highs, and cash-strapped dairy producers have noticed. In April and May, they sent 38,200 more dairy cows to slaughter, compared to the same months last year.

“Cull rates will likely remain high until dairy producers are back in the black. The combination of low milk prices and high beef prices could help accelerate contraction in the dairy herd, speeding the transition to lower milk production and higher dairy product prices,” she added.

For more on milk prices, read:

Economist Shares It Will Be a Tough Year Ahead for Dairy

Mon, 19 Jun 2023 20:10:34 GMT

As dairy producers open up their summer milk checks it will be hard to celebrate. This echoes the sentiments from Ben Laine, a senior dairy analyst with Terrain, who shares he is significantly less optimistic about milk prices and the overall state of the dairy economy compared to the beginning of the year.

Laine notes it is difficult to give the dairy economy a current grade, sharing it gets challenging when looking long-term, that futures are above the 5-to-10-year average.

“For example, we’re really probably slightly above that or close to in line to where that long term average is,” he says.

Laine adds that compared to last year, the dairy economy is much worse in terms of milk price, which is down significantly from last year’s record-setting prices, paired with still-high input costs.

“I think it’s pretty difficult to find anyone who’s above breakeven at these levels,” he shares.

Good News on the Horizon?

Laine is hopeful that a bearish grain market will push feed costs down but it won’t happen overnight.

“That’s not something that’s going to show up immediately. I think what is going to provide some support to milk prices in the second half of the year moving into next year is going to be a little bit more contraction on the supply side,” he says.

Laine also shares that the strong beef market incentivizes producers to sell off the bottom end of their herd.

“A lot of folks in this type of environment where the milk profitability is slowed and negative, it’s incentivizing higher cull rates, so you’re going to see a little bit of contraction, I expect, in the milk cow herd, tightening up supply a little,” he says.

Although Laine shares he is not convinced that a supply contraction on its own is going to be enough to propel us forward.

“I think we’re going to need a little bit tighter supply, but we would really need a big demand surge to see a significant increase in prices at this point,” he adds.

Laine does state that June is likely to be the bottom of prices, although he is being cautiously optimistic for the second half of the year.

“I think we’ll see some upward movement, but it’s still going to be a tough year,” he shares.

Culling Rates Higher than a Year Ago

Tue, 28 Feb 2023 14:21:10 GMT

Culling cows appears to be one way dairy producers have been dealing with negative margins, which allows them to manage cash flows and pay bills, said Sarina Sharp, analyst with the Daily Dairy Report.

For the week ending January 28, dairy cow slaughter exceeded 68,000 head, one of the biggest cull numbers ever for late January and comparable to only 2021 and the mid-1980s, when the government offered herd buyouts. Late January slaughter rates were 7% higher than the comparable week in 2022. For the first four weeks of 2023, Sharp noted that nearly 273,000 dairy cows were slaughtered, the most in over 35 years.

January 2023’s dairy cow slaughter was 600 head more than in 2021, when the U.S. milk cow herd stood at 9.45 million head. That year, the herd was on its way to becoming the largest herd in 25 years at more than 9.5 million cows.

Culling this past January happened much faster than it did in 2021, Sharp said. In December, there were 9.4 million milk cows in the U.S. dairy herd, which was smaller than the ballooning herd of 2021, she noted. According to USDA’s latest Milk Production report, month-to-month milk cow numbers in January grew by 9,000 head to 9.405 million, which was 38,000 head larger than the previous year.

“The high slaughter rate means that the U.S. milk herd is unlikely to grow quickly in 2023,” Sharp said. “While milk production could increase modestly, the primary driver behind the growth will be increased milk yields.”

Mild winter weather in January, for the most part, has boosted milk production throughout the Upper Midwest. Dairy Market News recently reported that spot loads of milk were being sold for a $10 per hundredweight under the Class III price.

“A discount that large indicates that excess milk is readily available and processing plants are at capacity,” Sharp noted. “Domestic and international demand has been weaker since the end of 2022, and weaker demand is the culprit behind lower milk prices.”

Slowing milk production gains should help temper some of the downward pressure on dairy prices, according to Sharp, but even with January’s near record-high cull rates, the milk supply is still growing, while demand is only steady to lower.

“Price recovery for dairy producers could still be months away,” she concluded.

For more industry news, read:

U.S. Dairy Cows Continue to Push Inland

Thu, 26 Jan 2023 17:01:57 GMT

The latest USDA Milk Production report released on Wednesday didn’t draw much change with a mere 0.8% increase in December’s milk production over the previous year, totaling 18.93 billion lbs. of milk. For the entire year, 2022 milk production grew by 0.2% over 2021.

Meanwhile, U.S. cow numbers documented growth, with 38,000 additional head compared to December 2021. This is still 9,000 fewer head compared to November 2022.

The revised November USDA production documented an increase of 1.1% more than the previous year with 17.4 billion lbs. This November revision represented a decrease of 49 million lbs., or 0.3% from last month’s preliminary production estimate.

A snapshot of the December report:

U.S. milk production: 18.93 billion lb., up 0.8%
U.S. cow numbers: 9.4 million, up 27,000 head
U.S. average milk per cow: 2,014 pounds, up 9 lbs.
24-state milk production: 18.125 billion lbs., up 0.9%
24-state cow numbers: 8.918 million, up 38,000 head
24-state average milk per cow: 2,024 pounds, up 8 lbs.

As revealed in the report, Texas led the way in year-over-year growth, up 25,000 head. This was followed by South Dakota with 16,000 additional cows, Iowa up 14,000 head and New York with an increase of 10,000 cows.

States that saw the biggest decline in cow numbers were New Mexico and Florida, both showing a decline of 13,000 head.

Phil Plourd, head of market intelligence at Ever.Ag, says that it was a little surprising to see the headline production number come in at less than 1%.

“Personally, I look at cow numbers first to see if the road to more milk is getting longer or shorter. This time around, USDA shortened the path, showing lower numbers for December and revising November lower for good measure,” he says. “I’d be more optimistic about growth at +40,000 cows year-over-year (where it looked like we were a few months ago) than +27,000 cows. We’ll continue to have growth, but it may be of the ‘medium’ variety. Texas and South Dakota remain at the top of the leaderboard in part because those areas feature recent or developing investments in processing capacity.”

Tanner Ehmke, a leading dairy economist with CoBank, says that with new cheese processing capacity coming online in the Texas Panhandle, that will add more tailwind to the herd growth in Texas.

“Same thing in South Dakota and all of these growth areas are cheese-producing states,” he says.

“All the milk is going to new cheese capacity. That’s underpinning local prices and firming their basis.”

2021 Livestock Market Outlook Roundup

Wed, 05 Oct 2022 18:44:12 GMT

The editors at AgWeb.com are looking at experts’ projections for a variety of commodities in 2021 to help you succeed and be profitable in the coming year. Here’s a look at what analysts are expecting for the upcoming year in the protein segments.

2021 Beef Outlook: New Challenges, New Opportunities

(Farm Journal)

Disruptions to the beef industry from the COVID-19 pandemic will likely linger into 2021, but the result may not be all bad for producers, Don Close, animal protein analyst at Rabo AgriFinance told AgriTalk.

Read more.

U.S. Pork Outlook: Will 2021 Be Different?

(Farm Journal)

Five respected economists in the pork industry share their insight on what’s ahead in 2021 and ways producers can make the most of new opportunities ahead.

Read more.

2021 Milk Price Outlook: Throw the Crystal Ball Out the Window

(Farm Journal)

Government intervention creates a level of uncertainty that makes a 2021 milk price forecast nearly impossible.

Read more.

The Heifer Discussion

Wed, 01 Jun 2022 14:13:04 GMT

The goal of producers is to raise heifer calves to fill their future pipeline. However, the increased cost associated with raising heifers has made us retool our thinking. Today many producers’ philosophy with raising heifers is only keep the heifers you need. Earlier management decisions are happening on dairies, with a more dialed-in, strategic breeding philosophy being adapted. While our Illinois dairy has also revised our breeding protocols, we still have room for improvement.

Our family dairy has increased the use of beef semen being served to our bottom-end cattle year-over-year. Recently, my husband, Scott, sighed when he learned all the calf hutches were full and four newborns needed a place to go. I kindly remind Scott that we only need so many heifer calves to fill the future pipeline.

Truth be told, Scott has a hard time breeding what is considered low-genomic-value cattle to beef. He often replies, “They are scored Very-Good or Excellent for a reason.”

While those low-genomic-value cattle have a place on our dairy, and on other dairies, too, I encourage producers, like my husband, to review the set protocols on which animals qualify for beef semen. Come up with a breeding game plan on how you handle those “VIP” cows.

Impacting Profitability

Our dairy has sold many surplus heifers, from open to bred heifers, to other dairies over the past decade. This has added a nice income to our bottom line, but with the increased cost associated with raising heifers, I’m not sold that we are truly getting our return on investment back. A heifer discussion is needed on our dairy. My guess is it wouldn’t be bad to revisit yours, too.

A Princess for a Princess

My daughter, Cassie, purchased a Jersey heifer calf in a junior-only sale back in 2014. At the age of 8, Cassie earmarked a few heifer prospects she liked after reviewing the catalog with her father. She ended up buying a heifer named Princess. Cassie’s Princess family has produced 20 heifer descendants. One of those descendants was recently sold in a pot load of surplus heifers that our farm sold to a Canadian herd last month.

The return on investment for Cassie has paid in spades. I’ll admit, sometimes the return on investment when raising heifer offers more than filling the future bulk tank or adding profit to the dairy’s bottom line. It also helps fund other projects, like a kid’s college savings account, or, to Cassie’s appeasement, her first car.

Dairy Semen Sales hit 17-Year-Low: What Will the Trend be Going Forward?

Thu, 14 Apr 2022 18:34:48 GMT

With the cost of inflation impacting every corner of a dairy, including the costs to feed heifers, the producer’s breeding strategy has been forced to become finetuned. More and more producers are keeping just enough replacements to fill the pipeline, so it is not surprising that the market for dairy semen sales has hit a 17-year-low, with year-over-year sales dropping nearly 7%, according to the National Association of Animal Breeders (NAAB) data.

With beef-cross calves creating a value-added revenue stream for producers, Beef x Dairy numbers have indeed skyrocketed. The 2021 NAAB year-end report showed that Beef x Dairy sales totaled 8.5 million units, an increase of more than 30% over 2020.

According to Lyle Kruse, Vice President of U.S. market development for Select Sires, Inc., Holstein dairy owners will continue to prioritize strategic use of sexed and Beef x Dairy due to the increased costs of rearing replacements.

“We could still see some growth in Beef x Dairy in the U.S.,” Kruse says. “Most Jersey dairy owners are already intensively using sexed semen and Beef x Dairy, as well as pure-beef embryos.”

Kruse reports that Select Sires has seen a decline in the U.S. on conventional semen sales over the last 4-5 years, while sexed semen sales continue to increase.

“Total dairy semen sales have also declined,” he notes. “Some of this is from the improvement in dairy reproductive efficiency (fewer units needed per pregnancy), but Beef x Dairy is nearing one unit per cow, which is clearly replacing dairy semen.”

Low Culling Rates

With Beef x Dairy ramped up, the question begs to ask, ‘Will we have enough dairy replacements?’ Kruse says he already sees some herds with a 30% or less culling rate.

Kruse shares that based on research from Dr. Albert DeVries and Dr. Chad Dechow, the optimal herd turnover rate to optimize production and not hinder genetic progress is between 25-30%.

“We are not there yet but heading that direction,” he notes. “To get there, dairies will need productive, healthy and reproductively fit older cows.”

However, he remarks that the trend in declining culling levels has occurred for several years, and he expects that to continue. Kruse also states going forward, this will lead to producers honing their genetic selection focus by using indexes that consider more factors affecting longevity, like Select Sires’ Herd Health Profit$^™ (HHP$^™) or Zoetis Dairy Wellness Profit$^® (DWP$^®).

Kruse says that dairy owners will start focusing on increasing the percentage of older lactation cows (third lactation and up) to eventually be equal to or more than 40% of total lactating cows.

“Herd management, cow comfort and utilization of technology, such as CowManager^®, to aid in accurate individual cow alerts for repro and health management will play a role also,” Kruse remarks.

While we are not there yet, Kruse believes this is what the U.S. is leaning towards. “It also fits our animal care and sustainability needs for the future. Most U.S. dairy owners want to continue to reduce herd replacement costs and harvest additional income by generating excess beef calves from uteruses not needed to gestate replacements,” he says.

With record inflation felt from every angle of the dairy, fine-tuning management must continue, and Kruse says he believes strategic breeding and smart replacement planning is here to stay.

“This includes planning for the most profitable outcome for every pregnancy generated based on the specifics of every individual cow and heifer in the operation,” Kruse notes. “This will include a mix of dairy conventional, dairy sexed and beef conventional and sexed semen and embryos.”

Based on estimates from the USDA-NASS, Chuck Sattler, vice president of the genetic program for Select Sires, shares with his team that the number of replacements is relatively low.

“We only have enough replacements to cull 31-32% of the current dairy cows and this will likely drive herd life and lead to less forced culling of older cows,” Sattler states.

Kruse believes the Beef x Dairy market for semen sales will continue to increase to eventually level off at around 10-11 million units sold per year.

“Some of this decision process is going to be driven by changes in the availability of native beef cattle, replacement dairy heifer prices and the Holstein bull calf prices as well as the level of adaptation for pure-beef embryos,” he says.

Minnesota Producer Perspective

Carlson Dairy, located in Pennock, Minn., has switched up their culling determinations in recent years, especially as they have strategically dialed in on their breeding program.

“We used to cull a lot more, but that has really changed,” one of the owners, Carl Carlson, shares.

Before, cows were culled for mastitis or low production and now cows are only leaving for low production. Carlson’s culling rate hovers between 31-32%.

“We want to keep older lactation cows in the herd longer because obviously we’re getting more milk out of them,” he notes.

Understanding their ultimate goals, the Carlson’s began utilizing Beef x Dairy a couple of years ago on both heifers and mature cows.

“Right away we went with using beef, as well as some conventional semen,” Carlson shares. “And now we’re strictly using either beef or sexed.”

The Carlson family milks 2,000 cows and basically raises all replacements on the home site, except for the 15% that are raised by a nearby family member. In addition, they farm 2,500 acres, including 1,000 acres of alfalfa and 1,500 acres of corn, all of which goes back to the dairy to feed cattle.

(Farm Journal)

Before breeding to beef, Carlson was raising excess heifers that they would later sell as bred heifers, but that changed when the market changed. Rising inflation costs increased (swallowed up sounds like lowered to me) the costs of raising heifers and selling bred heifers later didn’t always guarantee a returned profit.

“We weren’t getting the money back that we were putting into them,” Carlson shares. “We don’t want to raise more heifers than we need because obviously it costs a lot of money to raise a heifer today.”

While the prices for bred heifers have increased with rising milk prices, Carlson says they don’t plan to raise more heifers than they need.

The focus for this Minnesota dairy is to produce 60 heifer calves a month, and their breeding plan has become strategic to reach this goal. Today, 10% of cows are bred to sexed semen while the rest are bred to beef. For the heifers, 50% are bred to sexed while the other half is bred to beef.

An increase in conception rate is proof that the improved management is working. Carlson shares that their current conception rate is 51%. Additionally, the farm relies on a shot program, along with CowScout sensor collars from GEA for heat detection.

Limousine is the breed of choice for Carlson, and he shares that currently he has two buyers for his crossbred calves who pick up calves weekly. Fine-tuned breeding protocols that have introduced Beef x Dairy breeding now generate an additional revenue stream for the operation. Carlson gets $200 per crossbred calf and shares that in 2021 he sold approximately 150 crossbreds a month.

Creating just enough replacements has not only helped Carlson Dairy maintain its herd size, but also generate efficiencies throughout the operation to cushion their bottom line.

Which Dairies will be the Most Profitable in 2022?

Sat, 15 Jan 2022 18:59:17 GMT

ZISK is the fastest growing App in the Dairy industry, now used by 2800 farms owning over 2.4 million cows. As a result, the data collected by Zisk represents a sample of a quarter of the U.S. herds, and a snapshot of the situation in the U.S. dairy market today. It can be downloaded for free and provides producers with profitability estimates for their farm, and projections of how those profits will change moving forward. The ease of use, and speed with which it calculates means that the average user visits the app 3.62 times per day, spending approximately 5.5 minutes working in the app daily.

ZISK has released a report projecting expected dairy farm profits 2022.

Some of the main regional findings:

The most profitable parts of the U.S. in 2020 will be the Northwest and Northeast, but smaller farms in those regions won’t participate in this success. On average farms with less than 250 cows will make just $125 to $170 per cow in 2020, while those with more than 1000 or 5000 cows will earn about three to five times that level.
The least profitable region is expected to be the Southwest, and farms below 250 cows are expected to lose money in 2022. The Southeast is close behind. In both cases farms between 250 -1000 cows will make about half the income per cow of their neighbors with over 1000 or 5000 cows.

Detailed regional analysis, state by state:

ZISK users in the Midwest expect to be profitable, with even the smaller farms expected to make money, but in this case farms over 1000 and 5000 cows will make 7 – 8 times the profit of the smaller farms. The most profitable ZISK farms will be in Missouri.
The Southwest region is one of the contrasts, with Oklahoma projecting the best profits and California not far behind. Arizona users of ZISK aren’t feeling the same love, and New Mexico and Kansas producers are also forecasting profits much below the nations average.
Northeast producers have very different expectations for 2022, with some projecting substantial losses and others very profitable years. Since more users of the ZISK App are present in New York and Pennsylvania these naturally are more representative of what is expected in 2022, with average profit projecting per cow at $480 and $518 respectively.
The Southeast is not expecting a good year in 2022, except for Florida. In fact, milk producers in five states, Mississippi, Arkansas, Louisiana, Tennessee, and Alabama, are projecting losses or marginal profits per cow, with Georgia, North Carolina and South Carolina well below the nations average returns.
The Northwest is expecting a banner year, with Washington leading the way. Idaho, Colorado, and Utah also expect strong years, with just Oregon below the U.S. average and Montana’s smaller herds perspectives aren’t so positive.

Overall, the ZISK report data shows that the nationwide move towards larger herd size is born out in terms of profitability.

ZISK’s data shows that farms with over 1000 cows will be considerably more profitable than those with less, and those with less than 250 cows project profits per cow that are five times lower than those with over 1000 cows. Surprisingly, even farms with 750-1000 cows expect to be substantially less profitable (25-30% lower) than the 1K+ club. That said, the report shows that for 2022 there will be little benefit to have 2500 cows, 5000 cows or more, with profits being actually slightly lower per cow on these farms. As every report shows larger size farms are the way of the future, and milk purchasers and processers are expecting the same, with those investing expecting economies of scale to be crucial, but for the moment the 1000 plus cow club is the one to be a part of.

Sleeping With the Cows: A Unique Bed and Breakfast Experience

Fri, 05 Nov 2021 14:44:47 GMT

Dairy farming is a 24/7, 365-day commitment. At times it can even feel like farmers are literally with their cows nonstop. From 2-3 times a day milking to feeding and caring for the cattle, many feel like their work schedule are so full that they could sleep with their cows. Nestled in the small Northeast Iowa town, Dan and Lynn Bolin offer an experience to do just that.

The Bolins operate New Day Dairy GuestBarn, located near Clarksville, that invites visitors to basically sleep with their cows.

Lynn, who grew up in the Minneapolis suburbs, got her first introduction to farm life after marrying her husband, Dan, and moving to his family farm in 2011. “After living abroad and traveling around the world, we realized that we wanted to share a piece of the farm with others,” Lynn says.

(Farm Journal)

In 2015, the Bolins built a new farm facility that includes a natural ventilated freestall barn with perimeter inside feed alleys and a free-flow robotic system with an attached milk house, calf care room, office space, apartment and a Galaxy robot they have affectionately named Rita. While many dairies open their barn doors to their local community, Bolins took it a step further and invite visitors to come to sleep in their barn.

New Days’ GuestBarn is a place where families can experience new adventures on an authentic dairy farm all while having a comfy bed to sleep in at night. An experience that the Bolins believe captures what traveling experiences should include.

“We’ve found that our guests appreciate being able to relax on the farm in nature while they and their family are subtly learning and experiencing a different way of life, understanding where their food comes from, and gaining an appreciation of life that can’t be found on a Disney cruise,” Lynn says. “Their time on the farm enriches their lives back home much like a trip to another country and culture.”

The Bolins hope that the New Day Dairy experience further influences and affects guests’ lives and decisions when they return home.

A truly unique experience

While there certainly are plenty of bed and breakfasts scattered throughout Iowa and some that even originated as a former dairy barn, New Day Dairy GuestBarn stepped up the experience by offering a bed and breakfast where guests can actually spend the night at a working dairy farm.

(Farm Journal)

Guests can come and stay in a loft space above the cows, with two large windows that look directly into the barn. “It’s a 24/7 cow gazing view,” Lynn says. “So, if at 3 a.m., you get up to the bathroom, you can wander out and find out what the cows are doing.”

The 24/7 lifestyle is a lifestyle that Dan grew up with. His great-grandfather moved to the farm in 1890 from Illinois, making Dan the fifth generation to run the family farm. “My father started milking cows at the age of 13 when my grandpa went to work as the Postmaster in town,” he says.

In addition to sleeping with the cows, guests can take on the 90-minute “Be a Dairy Farmer Challenge,” that includes seeing ‘under the hood of Rita’, riding in a tractor, feeding a bottle to a newborn calf, scraping manure and working alongside Dan, or better known from his YouTube channel as ‘Dairyman Dan,’ and getting the very up close and personal view of a Midwest dairy farm. “They even get to scratch a few cow heads if they’re lucky,” Dan says.

Music Man

Visitors will see all the care that goes into producing a gallon of milk and they also can watch Dairyman Dan play his guitar or piano in the barn. Dan describes music as ‘life-giving’ and he collects instruments the same way that some collect art, purses, old tractors or tools. “Music provides me a space to worship, create and also provides a mental break from the ever-present stress that dairy farming can be,” he adds.

(Farm Journal)

Dan keeps a guitar in the robot room to tinker on while observing a new heifer learning to milk for the first time. Additionally, he has a piano in the alley that provides impromptu concerts for guests and several more instruments in their family home to enjoy as a family.

City Advantage

For Lynn, growing up in the city, nothing on the farm seemed what she now considers normal and has the advantage of connecting with consumers, as she “sees it with the eyes of an outsider.”

Like how health professionals talk to each other differently than what they ‘translate’ to their patients, Lynn says that she too has the advantage of talking to consumers coming from the city and crafts her way to talk to consumers—both in-person on the farm or through social media.

“As I’ve learned more about the farm, I can then take that knowledge and ‘translate’ it in a way without all the ‘farm’ words to consumers who are visiting our farm,” she states. “It’s all about giving enough information that someone understands but not so much they drown or are overwhelmed.”

During a struggling dairy economy, the New Day GuestBarn has been able to provide a place and a way for the Bolins to be at home on the farm with family. “Because we built the GuestBarn in such a unique way with 24/7 cow grazing, we have an exclusive product that we can price according to the market, not having to rely on the ‘markets,’ like our milk price,” Lynn says.

For more information about sleeping with the cows’ experience, visit www.newdaydairy.com .

As Dairies Dump Milk, Frustration Mounts Over Retail Buying Limits

Sat, 30 Jan 2021 16:06:46 GMT

From Georgia to Pennsylvania, videos like this are flooding social media. Dairy producers are facing a devastating scenario and being forced to dump milk down the drain . For some dairy farmers, this marks a first.

“This is the first time in the 32 years I’ve been in business that we’ve had to dump milk in the fields,” says Arnie VanDieden, a dairy producer in Texas.

The Texas producer isn’t alone. Paul Hartman in Reading, Penn. has also been in the business more than 30 years and faced a similar scenario earlier this week.

“Our dairy processor told us on Monday,” says Hartman. “They gave a letter that the driver dropped off that said they were supposed to dump our milk for the next two days; they weren’t going to pick it up. Right away when we heard it, we were shocked. All we hear is the milk is in demand, the stores are having trouble getting it, and then all of a sudden, they’re asking us to dump our milk. So that was kind of confusing.”

The Sudden Loss of Demand

Hartman’s processor told him the reason is a backup in demand. As COVID-19 hit, and industries like restaurants and food services saw an abrupt halt I business, the crisis started to unfold.

“We don’t have an outlet for this milk,” explains Scott Brown, economist with the University of Missouri . “Even if we have plants able to try to process that milk, there’s a little reason to do it at this point due to lack of demand.”

From high-end restaurants to fast food chains, fewer people are eating out and instead, staying at home due to stay-at-home orders. In turn, those consumers are eating fewer pounds of key items like butter and cheese. Therefore, a portion of the nation’s milk supply is without a home.

“The decline in the food service business has not been offset by the increase in the retail side of business,” says Michael Dykes, president and CEO of International Dairy Foods Association (IDFA) . “Overnight, we saw a paradigm shift and the business turned upside down.”

The lack of demand from the food service industry is so severe, it’s overshadowing the increase in demand at local grocery stores.

“We don’t have the data yet but will likely post record high and fluid milk consumption in the first quarter of 2020,” says Anna-Lisa Laca, editor of Farm Journal’s MILK. “Unfortunately, that’s not being offset by restaurant demand, and it’s not being offset by our lack of ability to export dairy products in a meaningful way at the moment.”

10% of U.S. Milk Without a Home

IDFA says with fewer restaurants and food services open for normal business, IDFA estimates 10% of the nation’s milk supply is without a home for the foreseeable future.

“That is staggering,” says Dykes. “I think the reason why you’re seeing the reports of dumped milk. This has happened so quickly that the markets can’t adjust.”

Finding a New Home for Lost Demand

Dykes says with the loss of essential demand, IDFA and other dairy groups are lobbying for dairy to be distributed to those who need it most, utilizing current government food programs, especially as unemployment rates grow to levels the U.S. hasn’t seen in nearly 100 years.

“We need to make sure that America’s food banks are replenished,” says Dykes. “When we look at what they’re suggesting, foods banks are buying 10 times as much food as they were on a six-month basis, from $50,000 to $500,000. They’re estimating they need $1.4 billion of food . So, we need to work with the U.S. Department of Agriculture to make sure that food in the food banks is there. Our industry has it, and Americans needed it.”

Dairy Groups Lobby for Programs to Help

While Dykes is in favor of government buying for both domestic and international food aid programs, he doesn’t want to see the government implement a program that artificially boosts prices short-term, acting as a wet blanket on the market later on.

“We don’t want to take actions today that put an overhang in the market,” says Dykes. “We don’t want to suffer the consequences for the next three years, so that we go through another three years like we just went through the last four or five years. Those kinds of programs may sound good on the surface, and we like it when someone’s buying, i.e. the government, but we don’t like it when the government holds on to it for a long time, and then when they start selling, it depresses the market for years.”

Short-Term Pain

While buying for food banks could help dairy find a new home for now, milk futures continue to be in a tailspin. Muted milk prices are putting immense financial pressure on dairy producers.

“We have to take this first 60 to 90 day window, which to me is going to be the toughest and the hardest to survive, and we need to think about the programs that can get money in producers’ pockets or get help and producers pockets as quickly as possible,” says Brown.

The Milk Supply is There

As short-term financial frustrations mount, Hartman and other producers are also frustrated with what they are seeing at some grocery stores. As they are dumping dairy down the drain, some retailers are limiting the amount of milk a shopper can buy during a time when the supply is there, and dairy leaders say logistics are working.

“If they’re being asked grocery store to only take one gallon of milk, I would get after the grocery store and say, ‘why am I allowed to get one gallon when dairy farmers are dumping milk,’” says Hartman. “Let’s take off those restrictions and let people buy as much milk as they can.”

Dykes agrees with urging retailers to remove restrictions on dairy. He says the supply is there and limits on buying aren’t necessary.

“Our members are getting the milk to the grocers,” says Dykes. “The milk is there. We need to remove those signs at any grocery store. There should be no limits on how much milk or any dairy product any consumer can purchase. It is available. Our members are getting it there, and our members are processing the milk.”

Dykes says the supply is there, as processors and food companies are going the extra mile to ensure dairy isn’t missing from refrigerators at any retail location. With COVID-19, he says that is no easy task.

“Our members are going above and beyond to make the make the product available,” says Dykes. “For example, if they weren’t doing three shifts a day, many of them have gone to three shifts, they’ve extended the hours and they are they’re maximizing the output through the plants, all the while preserving food safety. Our members are going above and beyond to make sure that the supply chain is has the product in it for the consumers.”

Mike North of Vault Ag thinks the panic buying has started to soften and agrees the limits on dairy should also disappear.

“I think the first couple days milk was like toilet paper, it went off the shelf and nobody could find anything anywhere,” says North. “Now that we have caught up to that, that is no longer the case and that sign can go away and should go away. Let’s face it; if somebody wants to walk in and buy three or four gallons of milk, let them do it, because on the other side of this, we are dumping milk and the reality is our processors are running around the clock right now doing everything they can to keep up with the demand where there is demand. And it’s for the retail space, and that is in the form of a gallon of milk. Take that sign down because the producer the producers are ready to put that on the shelf.”

Waning Outlooks

As those in the dairy industry lobby for more demand or financial help in other ways, outlooks from farmers are waning.

“At first, it looked like 2020 was going to be a pretty good year, and man did that turn on a dime,” says Hartman.

VanDieden says their family is cutting back on inputs, to try to feed their cows a little cheaper during this tough time. He and other producers are in survival mode, hoping better days for dairying are ahead.

“Since we are shortcutting supply, I believe on the backside of this it does start to open some doors for us to see some better prices,” says North. “Maybe 2020 finishes a lot better than it looks today; cross your fingers”

How Dairy Producers are Boosting Profitability

In the ever-competitive world of agriculture, dairy producers are continuously exploring new avenues to ensure the sustainability and growth of their operations. In the face of fluctuating market dynamics and economic pressures, innovative profitability strategies have become crucial, particularly in the dairy industry.

Alternative Profit Strategies
With the spotlight on profitability, many dairy producers have turned their attention to alternative profit sources. This shift has been especially significant during times when milk prices are less than favorable. Robin Schmahl from AgMarket.Net highlights the beef-on-dairy strategy as a pivotal approach to increasing income. By integrating beef genetics into dairy herds, many producers have successfully split their breeding practices between sexed semen and beef, leading to substantial income boosts over recent years.

Understanding Market Dynamics
Market dynamics play a critical role in shaping milk production. According to Phil Plourd, head of market intelligence at Ever.Ag Insights, the unfavorable economic conditions have historically squeezed milk production. Despite this, he remains optimistic about the upcoming 12 months, suggesting they present the best profit potential for dairy producers in recent times. His observation that “Historically, more money generally means more milk,” underlines the intricate relationship between economic conditions and milk yield.

Challenges with Dairy Replacement Heifers
The adoption of beef-on-dairy practices has, however, led to a decrease in the availability of dairy replacement animals. This scarcity has driven up prices, presenting a challenge for producers, especially those planning for expansion. Larger operations are now strategizing ways to secure replacements either through internal growth or external purchases well in advance.

“I don’t think they’re going to wake up three days before they open the new dairy and say, ‘Oh, wait, I need heifers,’” Plourd says.

Adapting to Market Signals
While there is potential market growth with higher milk prices, current dairy heifer inventory doesn’t entirely align with this trend. However, Schmahl points out that the increased milk prices offer producers more flexibility, allowing them to invest in replacements or retain older cows to maximize their output.

Risk Management in a Volatile Market
Efficient risk management strategies are crucial to navigating the ups and downs of the market. Schmahl emphasizes the importance of engaging in risk management without capping potential gains. He recommends option strategies or revenue protection, advising producers to remain flexible and informed as they plan for the future.

“You don’t want to limit your upside,” Schmahl insists, while cautioning producers about using futures, encouraging a balance between protection and opportunity.

As the dairy industry continues its evolution, staying informed and adaptable is essential for producers looking to capitalize on emerging trends. By employing innovative strategies and maintaining a sharp focus on market signals, dairy producers can navigate economic challenges to secure and enhance their profitability.

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