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Mielke Market Weekly

News and information for Minnesota and Northern Iowa dairy producers

MIELKE MARKET WEEKLY By Lee Mielke

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Dairy demand down, eyes are on milk outputs

This column was written for the marketing week ending July 22.

The U.S. milk deficit appears to have ended. Preliminary data indicates June ended seven months of output trailing that of a year ago, coming in at 18.975 billion pounds, up 0.17 percent from June 2021, first gain since last October, and follows a 0.5 percent drop in May.

June output in the top 24 states totaled 18.13 billion pounds, up 0.3 percent. Revisions raised the 50-State May estimate by 40 million pounds to 19.755 billion, 0.5 percent below a year ago, instead of the 0.7 percent originally announced.

June cow numbers totaled 9.423 million, up 4,000 from May numbers which were revised up 14,000 head, but were 78,000 head below June 2021. There were 56,000 more cows in the June milking string than on January 31. Cow numbers peaked in May a year ago at 9.507 million, 88,000 more than May of this year.

Output per cow averaged 2,014 pounds, up 20 pounds or 1.0 percent from June 2021.

Second Quarter output totaled 57.9 billion pounds, down 0.5 percent from a year ago, with cow numbers at 9.42 million, up 32,000 from first quarter, but 87,000 below a year ago.

Eyes are watching milk output carefully as dairy demand slows. The July 15 Dairy and Food Market Analyst warned; Break-even milk prices in California are around $23.50 per cwt, which, while down $1.50 from the 2022 high, is above current August Class III milk futures of around $20.30. n

Dairy cow culling under federal inspection totaled 233,000 head in June, according to the USDAs latest Livestock Slaughter report, up 7,800 head from May, but 4,500 or 1.9 percent below June 2021. Culling in the six month period totaled 1.52 million head, down 42,500 or 2.7 percent from a year ago.

In the week ending July 9, 49,900 dairy cows were sent to slaughter, down 1,900 head from the previous week, and 3,800 or 7.1 percent below a year ago.

This week’s Livestock, Dairy, and Poultry Outlook mirrored milk price and production projections in the July 12 World Agricultural Supply and Demand Estimates. It also reported that 2023 milk cow numbers are expected to remain steady at 9.4 million. The forecast for milk per cow is 24,290 pounds, 110 pounds lower than last month’s forecast, but 250 pounds higher than the 2022 forecast.

The Outlook also stated the farm-to-retail price spread for beef remains higher than its 12-month average prior to the COVID-19 shutdown. Following 2 years of annual inflation of over 9 percent in 2020 and 2021, retail prices for beef and veal are projected to rise another 6 to 7 percent in 2022. n

Meanwhile, the dairy market focus will likely shift back to the milk supply, especially in Europe, says StoneX. Recent EU milk production data continues to disappoint, but dairy products in the region seem available. A credible theory is sellers have been conservative in their volumes of forward sales given the up-trend in prices and the weak milk production. Now that prices are coming down, there is a scramble to sell uncommitted product even if production is still weak. Buyers everywhere seem to be playing coy in this environment, says StoneX.

StoneX Dairy Group says the GDT 80 percent butterfat butter price equates to $2.4470 per pound U.S., down 5.2 cents, after losing 25 cents in the last event, and compares to CME butter which closed Friday at $2.9075. GDT Cheddar, at $2.1886, was down 3.8 cents, after gaining 1.5 cents last time, and compares to Friday’s CME block Cheddar at $1.91. GDT skim milk powder averaged $1.6824 per pound, down 16 cents. Whole milk powder averaged $1.7043 per pound, down 9.2 cents. CME Grade A nonfat closed Friday at $1.6850 per pound.

Cheese imports totaled 21.2 million pounds, down 34.9 percent and the lowest for the month since 2018, according to HighGround Dairy. HighGround’s Lucas Fuess blamed China’s lockdowns and economic concerns as contributing factors for the downturn in the July 25 Dairy Radio Now broadcast.

Speaking of trade; the Dairy and Food Market Analyst reports West Coast port congestion has more than doubled since the contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired on July 1. On the Wednesday before the labor contract expired, the number of backed-up containerships reached the lowest level since December 2020 of 14 container ships. By Friday, that number had risen

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to 29, according to the DFMA. n

Commodity and Ingredient Hedging LLCs latest Margin Watch says Dairy margins weakened significantly over the first half of July as a continued selloff in the milk market more than offset projected feed costs that were at best flat to slightly lower. The corn market continued to decline despite forecasts trending warmer and drier in the Corn Belt as a deal being brokered by Turkey between Russia and Ukraine to allow grain shipments to resume.

The milk market has succumbed to the general pressure that commodities have been under recently as market participants have become increasingly concerned with soaring inflation, the MW stated. The Bureau of Labor Statistics reported that the broader food index increased 10.4 percent during June from a year ago, the largest increase since February 1981. The average price for a variety of dairy goods increased 11.8 percent, and there are signs that consumers are adjusting spending and trading down to cheaper alternatives to save money.

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On a positive note, dairy exports posted another record month in May with 579.2 million pounds of total product shipped. This was up 4.8 percent from 2021and the highest total for May ever. Cumulative year-to-date dairy product exports at 2.6 billion pounds are up 1.3 percent from the same period last year, the MW concluded. n

The July 18 Daily Dairy Report says economics have resulted in a growing share of dairy producers who crossbreed some of their cows with beef genetics to produce more valuable calves and avoid the expense of raising unwanted dairy heifers. Widespread crossbreeding pushed dairy heifer numbers to a 17-year low in January at 2.84 million, a drop of 9 percent from 2016’s peak. The lower heifer supply has slowed the potential for growth in the U.S. dairy herd, says the DDR.

The latest Crop Progress report shows 37 percent of U.S. corn is silking, as of the week ending July 17, 15 percent behind a year ago and 11 percent behind the five year average. 64 percent was rated good to excellent, unchanged from the previous week, but 1 percent behind a year ago.

Soybean blooming is at 48 percent, down from 61 percent a year ago, and 7 percent behind the five year average, 14 percent are setting pods, down 7 percent from a year ago, and 5 percent behind the five year average, 61 percent of the crop is rated good to excellent, down 1 percent from a year ago.

Cooperatives Working Together members accepted nine offers of assistance this week assisting sales of 813,000 pounds of American-type cheese, 44,000 pounds of whole milk powder and 227,000 pounds of cream cheese. The product is going to customers in Asia, Middle East-North Africa and South America, and will be delivered through January.

The sales raise CWT’s 2022 exports to 54.9 million pounds of American-type cheeses, 459,000 pounds of butter, 28.6 million pounds of whole milk powder and 5.8 million pounds of cream cheese. The products are going to 18 countries and are the equivalent of 771 million pounds of milk on a milkfat basis, according to the CWT.

Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at lkmielke@juno.com. v

FOLEY, Minn. — Despite the late start to the planting season, we are seeing soybean aphids and armyworms starting to pop up in southern Minnesota. While these issues are not yet widespread across central Minnesota, this is the time to start scouting for these pests. Now with alfalfa weevils still floating around, one might think that we aren’t quite far enough along to be concerned with other pest issues. However, it is the alfalfa weevil that is currently out of its usual timeframe and not the aphids or armyworms. With second cutting started across the state, remember to use your cutting timing to your advantage if you are still seeing alfalfa weevils. Unfortunately, we don’t have such tools for these other two pests.

For soybean aphids, prioritize scouting those fields where you have seen aphids colonize first. These will typically be fields with wooded borders and abundant buckthorn. Also keep an eye out for lady beetles and ants on soybean leaves as both are indicators that aphids may be present.

Thankfully, populations should still be low in our area at this point. However, diligent scouting is necessary to ensure this pest remains controlled. Remember that the economic threshold is 250 aphids per plant with most plants infested and aphid populations increasing. This threshold will help ensure your application is profitable and that you are not resetting the system unnecessarily.

If you are seeing predators such as lady beetles, they may be managing the issue and negating the need to spray. With more limited insecticide options moving forward, we need to be more discerning with those applications to help avoid resistance issues with our remaining insecticides.

For armyworms, prioritize areas of dense stands and lodged areas of grass crops. Current reports have it most common in corn planted into a rye cover crop. However, there have been grass hay crops impacted as well. Armyworm larvae are most active at night and in low-light periods. Most of the crop destruction of this pest happens towards the last two instars of its larval development. Warmer temperatures do help development of this pest.

Use a sweep net to look for small larvae. In corn, look in the whorl and on the soil surface. In small grains, shake the plant and count the ones that fall on the ground.

Economic thresholds for whorl stage corn are 25 percent of the plants with two of more larvae or 75 percent of the plants with one larva or more. For small grains and grass hay crops, use a threshold of four to five larvae per square foot.

This article was submitted by Nathan Drewitz, University of Minnesota Extension. v

Wet soils can harbor Phytophthora rot in soybeans

ST. CLOUD Minn. — Warm saturated soil has the potential to harbor Phytophthora root and stem rot. This disease is found in many areas where soybeans are grown. It is a soil borne disease which can kill and damage seedlings and plants throughout the growing season all the way up until harvest.

Later in the season, stems can appear bruised and soft and secondary roots will rot. Leaves will start to turn yellow and brown. Plants can later wilt and die and continue to do so throughout the season.

For plants affected mid to late season, brown lesions will appear on leaves and roots will continue to rot. The stems can start turning a dark brown from the base traveling upwards into the lower parts of the plants. Plants often die off in patches or in rows.

There are some soybean varieties that are tolerant to Phytophthora. You may still see some symptoms in tolerant varieties such as root rot and stunting.

While current options are minimal, some tillage may aid in drying out the soil, making it a less favorable environment. To help prevent Phytophthora, treating soybean seeds with an effective fungicide can be helpful. In areas where Phytophthora root and stem rot is persistent, planting a resistant or tolerant

crop could be beneficial. Taking steps to increase drainage in problem areas can decrease the potential for plants to acquire Phytophthora root and stem rot. These management practices will decrease the chances and impact of Phytophthora root and stem rot in the future. Crop rotation may help with managing this disease because it is only found in soybeans. Remember to crop scout and take notes to ensure you know exactly where the problem issues are at for future reference. This article was submitted by Kaitlyn Czeck, University of Minnesota Extension. v Water quality vital for healthy livestock

ST. CLOUD Minn. — As the days are getting hotter, water intake by livestock will increase. Livestock water requirements depends on many factors including size, productivity, diet and their environment. Water intake can positively or negatively affect growth, reproduction, and productivity of livestock, so it is essential that livestock have good water quality.

Whether livestock have access to groundwater or surface water, it is important that it is not contaminated by nitrates, microorganisms, organic materials and suspended solids. A high level of suspended solids, an objectionable taste, odor or color in water can cause animals to drink less than they should.

Toxic nitrates can be a concern in surface water and shallow wells, and can be contaminated by fertilizer, animal wastes or decaying organic matter. Marginally toxic levels of nitrate in water and feed together may cause nitrate toxicity in animals, so consider both sources when managing nutrients. Another component of water quality are microorganisms. Most microorganisms are harmless to livestock, but some can cause health problems. Blue green algae can be a problem in surface water and can be caused by manure or other nutrients in the water. Blue green algae can poison livestock, causing muscle tremors, liver damage and death. Other possible contaminants include bacteria, parasites, and viruses.

Mineralized water can also affect consumption. Salts, calcium and magnesium dissolved in water can affect water palatability and can have negative effects on livestock. Livestock have differing tolerance levels to salt content, depending on species, age, season of the year and physiological condition. Salinity in water can cause an increase in water consumption but it can also cause dehydration. Salty water can also cause livestock to refuse to drink and can lead to overconsumption when livestock become too thirsty. Common clinical signs of salt poisoning are weakness, dehydration, tremors and aimless wandering. Salt poisoning can also lead to paralysis and death. Water hardness is caused by calcium and magnesium and can be softened by sodium. However, adding sodium can cause water to have a higher salinity.

Routine water testing can help determine water quality for your livestock and can help you manage your livestock. Annual testing should be done for wells or if there is a suspected problem.

This article was submitted by Kaitlyn Czeck, University of Minnesota Extension. v

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Matt Erickson Fertile, Minn. July 21

"Things are looking good." The Land spoke to Matt Erickson on July 21 as he reported that it had been good growing weather, with temperatures in the 70s and 80s. A half an

“It’s a beautiful day here.” The Land spoke with Leah Johnson on July 21 as she reported that the farm received much-needed rain. Between July 7-10, three inches of rain fell on many of her inch of rain fell last Friday; it was perfect timing. "We were starting to show stress before the rain." Corn is now head high and close to tasseling. However, some of Erickson’s silage corn is still at least 10 days to tassels. The soybeans have filled the rows with broad leaves. “It looks pretty good. But, we’re still behind at least a week.” Erickson will be planting more sorghumsudangrass. He will start rye harvest in the next 10 days; he’ll be swathing it. He planted 2022 ryegrass for the first time last fall. “So far, I’m satisfied in what we’re getting out of it.” Erickson pointed out that ryegrass thrives on his lighter ground. “It looks like a decent crop.” Next week Erickson will be haying, checking cows, and moving them to different pastures. Good growing weather, and a nice rain, have gone a long way in giving Erickson optimism that there could be a good crop on the horizon. “A couple more timely rains will go a long way.” v FROM THE FIELDS Compiled by KRISTIN KVENO, The Land Staff Writer

Bob Roelofs Garden City, Minn. July 15 “We definitely need rain in a few days.” The Land spoke with Bob Roelofs on July 15 as he reported that the farm had received small amounts of moisture. The latest was one and a half inches of rain the previous week. Roelofs finished spraying soybeans for weed control and has started looking out for aphids. “Corn looks pretty good; starting to see tasseling pop-up.”

While there’s a lull in the field work, Roelofs concentrates on the livestock side. He will be loading hogs and working on hog barn upkeep.

The heat will stick around next week, with consistent days in the 90s. “So far, it’s been alright for the hogs.” The barns are equipped with sprinklers and fans to cool the animals.

Roelofs concern is that it could be challenging if nighttime temps stay in the 70s. With all the heat and humidity next week, there is a chance for rain. At this point in the growing season, Roelofs believes that the crops around the area will be average to slightly above average, which of course, depends on the amount of moisture that falls. “We’re going to need more rain towards the end of the month.” v Leah Johnson Evansville, Minn. July 21

fields. “It came fast; we had a couple of fields that didn’t get anything.” Scouting her fields, Johnson sees real potential in the crops. “I just feel so optimistic.” The corn is looking great. “We have some tasseled corn fields.” Johnson wrapped soybean herbicide and fungicide on the fields. She likes what she sees in the beans. “I’m so impressed.” The crop isn’t tall, but that doesn’t concern Johnson regarding yield potential. “It will be the shortest beans we’ve ever combined.” Johnson will be setting out sticky traps, looking for corn rootworm beetles. In her job at Red River Marketing, she’s looking for soybean cyst nematodes. Shots of rain periodically would be ideal for the crops. While it may have been a rough start, the corn and beans continue to flourish; Johnson hopes that translates into some nice yields in the fall. v

Scott Winslow Fountain, Minn. July 15

The second planting corn on the Scott Winslow farm is now knee-high. The Land spoke with Winslow on July 15 as he reported that the rest of his corn was over his head. He expects the crop to begin tasseling in a week to 10 days. The soybeans are filling in the rows and beginning to flower. Winslow is starting to scout the fields for Japanese beetles and grasshoppers.

“We’ve gotten a couple of shots of rain lately.” Small increments of moisture are perfect, as Winslow would like storms to stay away. “I don’t need all that hard rain.” However, he would like rain when corn tassels.

It’s the Fillmore County Fair next week, so Winslow expects rain then. “It always rains at least one day of the fair.” Winslow will be part of the Farm Bureau Commodity Contest; the theme is sweet breads made from wheat flour. While not judging the event, Winslow looks forward to sampling a few entries.

In addition, he and his daughter, Katie Drewitz, will be judging the fair’s homemade wine and beer contest. “I make a little homemade wine myself.” The fair will be busy for Winslow with judging, sampling and taking in all the sights.

Back in the field, the crops are behind but flourishing; Winslow has seen this before with good results at harvest. “We’ve had crops that have lagged before; as long as we keep getting moisture, we’ll be all right.” v

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By WHITNEY NESSE The Land Correspondent

BROWNTON, Minn. — When driving west of the Twin Cities on U.S. Hwy. 212, one is bound to see pink on the horizon. Not the pink of a beautiful, prairie sunset, but the hot pink barn which stands close to the highway, whose brightness begs to be seen.

The building site is flashy, boasting its bright pink barn and pink trim. However, you will find that the horseman who resides there is neither flashy nor boastful. On the contrary, Keith and Jane Tongen are humble people who have strong faith, a rich heritage and a deep love for horses.

“I am a third generation horse trader. My grandpa was August Olavis; my dad, Curtis Olavis; and I got the Norwegian name of [Keith] Olavis as a tradition. We’ve all three been horse traders,” beamed Keith. “I always tagged along with my dad when he would go out and buy a horse. When I was 12 years old, my dad was in Waverly, Iowa at an auction with some horses. My mom took me to the Twin Cities, I got on a Greyhound bus, rode the bus to Waverly, and bought my first horse. I paid $60 for it and sold it seven days later for $125, so I was off and running!” reminisced Keith. “I skipped my junior prom to go to a horse auction.” Keith did, however, make it to his senior prom with Jane as his date, and the rest is history they chuckled.

As a teenager, Keith recalled his family did a lot of retail trading of riding horses. “We would advertise in the Minneapolis Sunday paper. At that time, you could get an itty bitty ad. It was three lines for $48 dollars. Many weeks we would sell seven or eight riding horses on a Sunday. If we ran an ad, we couldn’t go anywhere. We stayed home and answered the ad!”

Keith noted it was in the early 1980’s when horse trading picked up. Through various industry contacts, he obtained contracts with the YMCA and Girl Scouts where he would lease each of them horses as well as all of the riding tack during the summer months. “We did that for quite a number of years. It was a win-win situation for [all parties] and it was fruitful for a while.”

During that same time, while their business was expanding, Keith learned about another opportunity within the horse industry. “I got hooked up with a couple of friends of mine that were shipping slaughter horses. At the time, there were a ton of horses around. Horses were overpopulated. We hear all about [horse] rescues now. Well, we were doing that back then. Many of the camp horses that I sent to the Girl Scouts and YMCA were purchased as slaughter horses and they were great!”

Keith highlighted that during the years he was shipping slaughter horses, which was from 1985 to 2020, he maintained excellent relationships with his veterinarians and border control inspectors. “I always tried to treat the horses with respect and dignity. I made sure they were fed and watered properly and loaded properly. As time went on, more and more rules and regulations were implemented — and most of them were good rules. It’s really a political hot potato, the whole horse slaughtering thing, but throughout that whole time I was never ashamed of [my job]. We did it, we tried to do it with dignity. There’s a time to live and a time to die, just like Ecclesiastes says,” said Keith.

As business picked up, Keith made more contacts within the horse industry — some of them being folks who worked with pharmaceuticals. “We did quite a bit of business in pharmaceuticals with different veterinary supply [companies]. They want healthy — and even pretty — horses.”

Keith said that not only can horse plasma be used in different anti-rejection drugs for human use, it is also useful for harvesting antibodies for veterinary use. He explained that horses purchased for pharmaceutical use are used as production animals which are kept and cared for as long as they have good antibody counts. Once their numbers begin to decrease, that particular horse will be sold and another bought. “There is so much to it. One outfit down by Sioux Falls had a horse that was [producing] for 22 years. I said to the guy, ‘I bet that’s a million dollar horse!’ And he said, ’Oh, no, no, no. That’s a many, many million dollar horse!’”

By the year 2000, Keith was spending much of his time on the road going to horse auctions. “In 2000, I had a 41-day stretch where I slept only five nights at home. I got very tired of road travel,” he said. His travels took him mainly

Keith and Jane Tongen in a sea of pink on their farm near Brownton, Minn.

throughout the Midwest and parts of Canada. However, there were times Keith traveled to Pennsylvania, California, Washington and Idaho.

In the 1990’s Keith began exporting draft horses to Japan. “In 2004 I was able to ride along. They would charter a 747 jet and put approximately 90 horses on it. The airplane ride itself was about $4,000 per horse and they didn’t even serve peanuts or coffee or Coke!” laughed Keith. While he was in Japan, Keith and Jane’s daughter was serving in the U.S. military stationed in South Korea, so Keith had the opportunity to visit her while she was serving overseas.

The horse industry has not merely provided a career for Keith. Horses have been a chosen lifestyle. Throughout his growing up years and during his career, Keith has been involved in every aspect of being a horseman. From pleasure riding to racing, exporting, pharmaceuticals, leasing, retail, slaughter, breeder, farrier, trainer, showman, judge, announcer, and the list continues. “I grew up in the Western Mounted Paraders saddle club, the old Palomino outfit. The whole family rode: mom, dad, brother, sister. And when Jane and I got married, us and all of our girls rode. It was a family thing,” he said. The Tongens were part of the Western Mounted Paraders for 40 of the 57 or so years the club existed.

Keith also participated in chariot racing. “We would travel to county fairs in Minnesota, Iowa and South Dakota. The training regimen with them [was strict]. I would drive those horses every day and try to put seven to eight miles of conditioning on them. We were very successful through the years. It was a lot of fun!” Working in the horse industry has been a family affair for the Tongens. Keith laughed as he said he used to enforce family bonding time on Sunday nights. The horses which had been purchased during the week had to be sorted into varying pens for loading each Monday. So, as a family, Keith, Jane and their four daughters would spend Sunday evenings sorting horses as a family. Keith and Jane also recalled one summer, when their daughters were old enough to start working off of the farm, Keith offered them a business proposition. “I told them that if they want to ride horses [I would give them a job] and we’ll split the profit. We sold 900 riding horses that year. They made pretty good wages!” he said.

For the last 30 years, Keith has been the horse superintendent at the county fair and is currently the McLeod County Fair president. McLeod County is celebrating its 150th anniversary of the fair and with that celebration they are welcoming the Budweiser Clydesdales. “We’re really, really excited to welcome Budweiser. That should be a big deal!” he said.

Although Keith may be seeing a bright pink sunset on his time in the horse industry, the tradition of the iconic pink farm will remain. As he reflected on his work in the horse industry over the last 50 plus years, he said the industry is losing horsemen and what remains is horse lovers. “There is a difference,” he said.

Although not ready to retire, Keith and Jane are certainly slowing down. Keith is spending more of his time making and selling hay. “A number of years ago, another trader friends’ wife asked me, ‘Keith, how long are you going to stay at this?’ I said, ‘Well as long as I enjoy it and as long as I’m physically able.’” v