Dairy Outlook. The milk supply is much tighter than anyone thought earlier. USDA's milk production report for 20-select states indicates that March milk production was down 2.2 percent from the same month a year earlier. Fifteen out of the 20 states had production declines from a year earlier. The recent cold storage report also shows that stocks of butter and cheese are below year ago levels.

The production losses in March were surprising. Production for 20 select dairy states was 12.4 billion pounds , down 2.2 percent from a year ago. February milk production was down 1.6 percent after accounting for data revisions and leap year. Production per cow in March averaged 1,599 pounds, 33 pounds below a year ago. And cow numbers in March were 7.76 million head, 9,000 head less than February 2001.

Arizona production was down 9.3 percent due to reductions in production per cow. Texas and Missouri had the highest production losses, down 15.5 and 10.9 percent, respectively , due to fewer cows and reduced production per cow related to the bad weather. Others states such as Kentucky, Minnesota, New York, Ohio, Pennsylvania, Vermont and Virginia had production declines of 4-5 percent. Only California, Idaho and Indiana had production gains. (Bill Thomas)

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Will Cotton Wear It's "Rally Cap" This Summer. Cotton prices are likely to remain weak and under pressure for the near term. USDA's estimate of 2001 planting intentions at 15.6 million acres may in fact end up being a little low. Mill use of the 2001 crop may improve somewhat but not enough to offset a large increase in US production if weather cooperates.

Exports will be a big factor. Given the decline in US mill business, it will take a near record level of exports to keep from building stocks if weather cooperates. The US has never been able to export that amount of cotton without China being a big buyer and right now that doesn't appear very likely. 

Seasonal rallies due to weather may be good times to lock in price on a portion of the 2001 crop. Growers should be in no hurry, however. Prices are currently below the loan rate and it will take something with a "6" in front of it to convince most growers to do anything. (Don Shurley)

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Will We Have Fewer Peanut Acres in 2001? US peanut producers indicated in USDA's Prospective Plantings report reducing peanut acreage from last year to 1.47 million acres, a 5% reduction. Georgia producers intend to plant 480,000 acres of peanuts which would be a reduction of 2% from the 2000 crop. Southeast peanut acreage is projected down 2% while the Southwest is projected down 11% from last year. The Virginia-Carolina region plans to keep acreage the same. 

Texas had ideal planting conditions in 2000 thus planting about 50,000 acres more than anticipated. This year Texas producers have the same concerns as Georgia producers with water availability and higher costs reducing their thin profit potential. Other factors affecting producers' acreage decisions this year include slow trading in the export market, no quota increase in 2001, and lagging demand in the domestic edible market. Of course, mother nature has a lot to do with the final acreage. Georgia producers are planting peanuts in a narrower time window of about four weeks in order to decrease the risk of tomato spotted wilt virus while remaining within the final planting date for crop insurance. 

On the marketing side, contract offers have been reported in West Texas at price support for quota and $350 for additional runners. No activity has been reported elsewhere. Loan support prices for the 2001 crop are $610 per ton for quota and $132 per ton for additionals. The quota support price is frozen for the life of the current Farm Bill which ends with the 2002 crop. The GFA pool is projecting a $255 to $260 per ton return for loan additionals above the $132 advance. About 47,000 tons of Seg. 1 additionals remain in inventory and will be crushed within the next month if not sold for edible export. (Nathan Smith)

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