Lower butter prices reflect high stocks

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Corn prices for the 2012/13 year are unchanged from July; however, the price range is narrowed to $6.90-$7.00 per bushel. For the 2013/14 year, corn prices are raised to $4.50-$5.30 per bushel. The production forecast for the 2013 corn crop is lowered for August based on slightly lower expected yield.

The soybean meal price forecast for 2013/14 is increased to $305-$345 per ton from July. Soybean meal production is lowered for August, and the higher price keeps the production in domestic use at the expense of exports, which were lowered. According to the most recent Agricultural Prices report, the preliminary July alfalfa price was $209 per ton, lower than June but 6 percent above the July 2012 price.

The 2013 milk production forecast is raised slightly in August from July to 202.1 billion pounds. The 2013 forecast is raised due to changes in second-quarter reported production. The 2014 milk production forecast remains unchanged from the July forecast at 204.5 billion pounds Current-year fat basis imports are raised in August to 4.2 billion pounds, largely on the basis of year-to-date cheese imports, and are expected to decline to 4.1 billion pounds in 2014, unchanged from the July forecast. This year’s skim-solids basis imports were lowered to 5.4 based on a year-to-date decline in casein imports.

Imports are forecast at 5.4 billion pounds for 2014, unchanged from July’s forecast. Current-year fat basis exports are increased to 10.3 billion pounds for 2013, based on strong shipments of butterfat. Fat basis exports are expected to hold at 10.3 billion pounds in 2014. Current-year skim-solids exports were raised in August to 37.0 billion pounds based on continued strength in nonfat dry milk (NDM) exports; exports in 2014 were unchanged from the July forecast at 36.4 billion pounds.

Fat-basis ending stocks for both 2013 and 2014 were lowered this month from July to 13.4 billion and 12.7 billion pounds, respectively, as lower butter prices are expected to boost use. Skim-solids stocks are forecast at 13.0 billion pounds for the current year, unchanged from July’s forecast. Skim-solids based ending stocks for 2014 were lowered slightly from last month to 12.7 billion pounds, based on continued robust NDM demand.

Cheese prices are increased for August to $1.750-$1.770 per pound for 2013. The higher 2013 forecast cheese price reflects continued strong demand. Cheese prices are expected to decline to $1.630-$1.730 per pound in 2014. Despite higher stocks, price prospects for NDM reflect continued strong export demand for dry milk products and reduced supplies from the European Union.

The NDM price is projected at $1.635-$1.655 per pound for the current year, and at $1.590-$1.660 per pound next year, both forecasts are increases from July. Butter prices are lowered in August to $1.495-$1.535 per pound for 2013 and at $1.445- $1.575 per pound for 2014; relatively high butter stocks and currently weakening prices underpin this forecast. Whey price forecasts are unchanged from the July forecast at 58.5-60.5 cents per pound this year and 56.5-59.5 cents per pound for 2014.

Class III milk prices are increased in August to $ 17.80-$18.00 per cwt, reflecting the higher expected cheese price and steady whey price. The 2014 Class III price forecast is unchanged from July and is projected to slip from this year to $16.55- $17.55 per cwt based on lower expected cheese prices next year. The 2013 Class IV price forecast range is narrowed to $18.25-$18.55 per cwt. Next year’s Class IV price forecast is unchanged from July’s at $17.65-$18.75 per cwt based lower butter prices. The 2013 all milk price is changed this month to $19.60-$19.80 per cwt by raising the lower end of the price range by 10 cents and is lowered for 2014 to $18.65-$19.65 per cwt.



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