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If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
Location
If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
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Dairy’s dilemmas: heat, HPAI, and optimism.
Western milk production totaled 6.25 billion pounds in May, representing a 1.2% decline from the previous year. Production decreases occurred in every state except Washington. The primary reason for lower production is the reduction in herd size. Due to the scarcity of replacement heifers, many dairies are keeping cows longer. Above-average summer temperatures in the West are likely to hinder any short-term improvements in milk production. Despite these challenges, there are positive developments. Producer sentiment is rising, with milk prices forecasted to be in the $20 to $21 per cwt range from July to October. Furthermore, feed costs have significantly decreased compared to last year. Dairy farms are moving closer to breakeven levels in the second half of 2024.
As of June 27, Highly Pathogenic Avian Influenza (HPAI) cases have spread to 12 states. Within AgWest’s territory, Idaho is the sole state with confirmed HPAI cases, and producers report the disease takes two to three weeks to spread through the herd. The USDA is offering financial help for dairies affected by HPAI. Despite public concern, pasteurization continues to keep dairy products safe for consumption.
Dairies are under considerable financial stress. Even with lowering feed costs, profit margins will need time to recover. Nationally, dairy producers have seen milk prices drop by over $2 per cwt in the last year. Northwest states saw even larger reductions in milk prices. In Idaho, the January 2024 average price was $20.20 per cwt, a decrease of $2.30 from the previous year. Similarly, Washington producers faced a $2.50 reduction per cwt in milk prices. Many Washington dairies also have higher milk check retention costs as cooperatives may withhold a portion of their milk check payment to support the cooperative’s goal, such as building new facilities. Although feed costs have decreased by over $4 per cwt over the past year, it's insufficient for producers to reach their breakeven point. Non-feed production expenses have leveled off but remain high. Even with a rise in future prices, it may not be enough to offset production costs in 2024. The milk-to-feed ratio (a measure of how much feed can be purchased with the revenue from one pound of milk, commonly used as a proxy for dairy profitability) paints a bleak picture, signaling that many dairy farms will continue to operate at a loss. Careful management of expenses, capital investments and risk management strategies are crucial.
12-Month Profitability Outlook
Aug 15, 2024, 11:00 AM
AgWest is pleased to be joined by Derrell Peel, livestock marketing specialist from Oklahoma State University, for a timely outlook on the cattle market. In this one-hour webinar, Derrell will look at expected production levels, profitability forecasts and essential risk management tools to ensure you’re well-prepared for the cattle market’s future.