Progressive Dairy gives month-to-month on-line updates of necessary dates, studies and recommendation affecting threat administration selections.
Questioning about what threat administration instruments your fellow dairy producers are utilizing? Writing in an American Farm Bureau Federation Market Intel report, employees economist Dan Munch supplied a have a look at two well-liked applications, Dairy Income Safety (Dairy-RP) and Livestock Gross Margin for Dairy (LGM-Dairy).
Over the three-year interval of 2019-21, the variety of Dairy-RP insurance policies bought elevated 43%. Participation to date in 2022 has almost exceeded these in 2021, with greater than half the 12 months remaining.
By state, Wisconsin had essentially the most 2021 Dairy-RP insurance policies with 1,466, adopted by Minnesota (757), California (488) and New York (377). Participation in 2022, to date, is at present solely 156 insurance policies behind final 12 months, with the biggest web beneficial properties in California (+56), Iowa (+25) and Texas (+11). The geographic distribution of Dairy-RP insurance policies in 2021 discovered vital concentrations in heavy milk manufacturing counties throughout the higher Midwest and California. Different excessive milk producing states like New York, Pennsylvania, Idaho, Washington and New Mexico additionally maintain vital participation.
LGM-Dairy participation and utilization statistics over the previous 5 years (2017-22 thus far), Munch mentioned there are few discernable participation developments. Total, participation in LGM-Dairy exhibits a reasonably steady base of customers who’ve discovered advantages in utilizing the applications’ distinctive bundle hedging strategy beneath short- or longer-term, extremely customizable contracts.
Insurance policies bought ranged between a low of 1,067 in 2018 and excessive of 1,622 in 2017, with 2022 at 1,355 to date. This represents a fourth of the Dairy-RP insurance policies bought this 12 months. geographic distribution, 2021 gross sales of LGM-Dairy had been nearly completely in Higher Midwest states, probably revealing consolation in using Class III milk costs. Wisconsin had essentially the most insurance policies bought with 872, or 64% of all LGM-Dairy insurance policies bought final 12 months, adopted by Minnesota (268) and Michigan (118). Between 2021 and 2022, the biggest enhance in insurance policies bought occurred in Wisconsin (+144) and Michigan (+22), whereas the biggest drops occurred in Florida (-26) and Ohio (-5).
The variety of counties with lively LGM-Dairy policyholders has declined by about 40% since 2017, though the % of complete U.S. milk manufacturing insured has hovered between 0.74% and 1.15% throughout the identical timeframe. The 1.98 billion kilos insured this 12 months beneath LGM-Dairy is simply about 0.05% of quantity insured beneath Dairy-RP, with the typical quantity insured additionally a lot smaller at 1.59 million kilos versus 8.6 million beneath Dairy-RP.
To learn the entire evaluation, learn: Reviewing participation in dairy risk management programs.
At anyone time, Dairy-RP gross sales are open for as many as 5 future quarters. Gross sales shut 15 days earlier than the start of the quarter. For instance, the interval to buy Dairy-RP protection for the third quarter of 2022 closes on June 15. The market adjustments every day and Dairy-RP endorsements should be bought between the CME market closing and the subsequent CME opening.
Dairy-RP protection can’t be bought on days when main USDA dairy studies are launched that might affect markets, together with Milk Manufacturing, Chilly Storage and Dairy Product studies (see calendar). Dairy-RP can also be not obtainable on days when relevant futures contracts transfer limit-up or limit-down, or on days when Chicago Mercantile Alternate buying and selling is closed as a consequence of holidays.
Gross sales durations for the LGM-Dairy program are open on a weekly foundation. In contrast to Dairy-RP, LGM-Dairy is offered even when a gross sales interval falls on the day of a USDA report.
Click on right here or on the calendar above to view it at full dimension in a brand new window.
Dairy-RP including ‘pure catastrophe’ protection flexibility
In February, the Federal Crop Insurance coverage Company authorised revisions to a number of insurance coverage, together with Dairy-RP, LGM and Livestock Income Safety (LRP) plans. The revisions are relevant for the 2023 USDA crop insurance coverage 12 months, starting July 1, 2022, and succeeding crop years.
Dairy producers utilizing the USDA Threat Administration Company (RMA) Dairy-RP program could have an extra earnings security web masking milk manufacturing losses as a consequence of pure disasters, reminiscent of a twister or fireplace. Different pure disasters that may very well be included can be floods, extreme storm injury or earthquakes.
Underneath Dairy-RP, producers are obligated to market 85% of the coated milk quantity or 90% of the elements to obtain full indemnity funds. In occasion of a pure catastrophe, nevertheless, these thresholds is probably not reached.
The availability doesn’t insure towards the loss of life or different loss or destruction of dairy cattle. Moreover, any affect to herd well being that impacts milk manufacturing would have to be tied to the pure catastrophe.
For extra info, learn: Dairy-RP including ‘pure catastrophe’ protection flexibility.
Seemingly in a race to the highest, record-high milk costs surpassed record-high feed prices in March to assist buffer dairy producer milk earnings margins calculated beneath the Dairy Margin Protection (DMC) program. The March DMC margin was $11.55 per hundredweight (cwt), above the highest Tier I insurable stage of $9.50 per cwt.
The March 2022 introduced U.S. common milk value rose $1.20 from February to $25.90 per cwt, a brand new report excessive. Offsetting a part of the rise within the common milk value had been skyrocketing common prices for alfalfa hay, corn and soybean meal.
Learn: Milk value rise outpaces feed prices in March DMC margin.
April’s DMC margin will probably be introduced on Could 31.
USDA milk manufacturing report, outlook
Month-to-month U.S. milk manufacturing was under year-ago ranges for a fourth consecutive month in April, with cow numbers decrease than a 12 months earlier and output per cow unchanged.
Preliminary April U.S. cow numbers had been unchanged from March. Nonetheless, March estimates had been revised upward by 7,000 head from final month’s preliminary report and are up 35,000 head from January. April 2022 U.S. cow numbers are nonetheless down about 105,000 head from the height in Could 2021.
Learn: April 2022 milk manufacturing down from a 12 months in the past.
The USDA’s month-to-month World Ag Provide and Demand Estimates (WASDE) report, launched Could 12, revised the 2022 U.S. milk manufacturing estimate upward, with increased milk cow inventories greater than offsetting slower development in milk per cow. With the elevated manufacturing, the outlook for farm-level milk costs was regular to solely barely decrease.
In comparison with final month, the USDA raised the 2022 milk manufacturing forecast by one other 400 million kilos to 226.7 billion kilos. If realized, 2022 manufacturing can be up simply 0.2% from 2021. The projected annual common Class III value was unchanged from final month at $22.75 per cwt. The projected Class IV value was decreased 25 cents to $23.80 per cwt. The 2022 all-milk value forecast was lowered a nickel to $25.75 per cwt.
In its preliminary look into 2023, the USDA projected milk manufacturing at 229.5 billion kilos, up about 1.2% from the 2022 estimate. Annual common value projections for 2023 had been: Class III – $20.50 per cwt, Class IV – $21.40 per cwt and all-milk – $23.55 per cwt.
For extra, learn Financial outlook: Increased 2022 milk manufacturing forecast has small affect on projected costs.
Myers will spotlight the most recent Class III and IV futures milk value forecasts and share updates on DMC margins and the Dairy-RP program.
Advance registration isn’t vital. Every webinar is offered by way of podcast or telephone. To take part, click on here or telephone: (646) 558-8656. When prompted, enter assembly ID 848 3416 1708 and passcode 474057.
- Federal Milk Advertising Order (FMMO) uniform value and producer value differentials for April milk marketings had been launched, Could 10-13. April 2022 uniform milk costs had been up as extra high-valued Class IV milk began coming again to the swimming pools. Costs paid to producers are at report highs however are probably nearing their peaks.
Learn: Class IV coming again to the pool, serving to float uniform costs close to report highs.