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Dairy production rises

Agriculture.com Staff 02/01/2012 @ 3:58pm

USDA placed December 2011 milk production at +2.7% compared to same time previous year. The aggressive long term up trend of production remains intact, however demand continues to grow, and all of this with higher than normal feed costs.

The 2011 La Nina based drought did not impact the major milk production states as previously thought, and that story was one of more of trouble for crops. 

Climate

A interview of myself during early 2011 correctly forecast a crop problem for 2011. In recent years, the model research had suggested high probability for a decline in yield and and production of corn, and a significant cyclical trend change for US temperature and precipitation. The end result was a decline of national precipitation, and a high national temperature, a correct forecast, and a decline of production of 6% and since the 2009 record and cyclical peak of production, a correct forecast. The model research still allows for a crop problem now to 2014 and relative the second most important cycle of one's lifetime, but we now need to consider the chance we have seen the turn. Contact us at afs@ag-financial.com for the annual corn report which offers the climate research.

Feed cost

The model assumes chance for a decline early February for the grains, and there is chance for wide range trade until late spring months, but the long term script offers $6.80 to $7.50 corn. Weather risk may decline now, but I would not assume the next few years are a safe time for grain production. The model research suggests we have seen some of the fastest global economic growth for a while, but volume of commodities usage will continue to rise.

Economy

The model appears to have been correct for calling for a long term bottom for the US economy during August or October, and evidence was the January PMI manufacture index at 54.1%, the highest level since August 2011. My Eco Trend Indicator moved to a new record high, and this indicator is of a positive correlation to the nominal GDP per capita economy indicator, and so, I assume a new record high during 2012, and although I have not seen a 2011 nominal GDP per capita number, the best guess is a new high occurred. The model research suggests a growing economy for 2012, and at a faster pace than during 2011. The model research suggests that a 9yr business cycle for unemployment peaked during 2010, and will decline to 2019, there is chance to achieve 5% unemployment by that time.

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