June-projected corn prices were raised from May to $6.75 to $7.15 per bushel for 2012-2013. The 2013-2014 corn supplies were tightened in the June USDA forecasts. The reduced corn production estimate is based on lower forecast yields, a result of slower than usual plantings in parts of the western Corn Belt due to cool wet weather. The price effects of lower production and higher expected food, seed, and industrial use were largely offset by lower forecast feed and residual use.
The 2013-2014 forecast corn price is increased from the May projection to $4.40 - $5.20 per bushel, but this is still well below 2012/13 forecast price. Soybean meal prices for 2012-2013 are increased from May to $450 per ton.
The 2013-2014 price forecast was bumped up to $290 to $330 per ton from May, well below this year’s expected price. The higher soybean meal prices reflect higher soybean prices. Stronger than expected soybean meal exports also contributed to higher soybean meal prices for 2012-2013.
The May preliminary alfalfa price was reported in the Agricultural Prices report at $221 per ton, which was higher than anticipated as the first cutting was delayed in many places. Rain and cool temperatures are the main culprits.
Consequently the milk-feed price ratio is likely to remain below a level that would support a more robust expansion in the dairy herd.
The June milk production forecast for 2013 is unchanged from May at 201.8 billion pounds. The May Milk Production report placed production for the first 4 months of 2013 slightly ahead of the same period last year after adjusting for the extra milking day in 2012.
After accounting for the relatively weak milk-feed price ratio, there was no basis for increasing forecast production from the May estimate. Milk production in 2014 was lowered in June from May’s forecast to 204.5 billion pounds. Weak milk-feed price ratios will likely slow production growth through much of 2014.
Fats basis 2013 milk equivalent imports were raised in June to 4.1 billion pounds and are expected to hold at 4.1 billion pounds in 2014. Skims-solids basis milkequivalent imports were unchanged from the May forecast at 5.6 billion pounds for this year and 5.4 billion pounds in 2014.
Fats basis exports were lowered in June to 9.8 billion pounds based on sluggish butterfat shipments in April. Fats basis exports are unchanged from May at 10.3 billion pounds in 2014. Skims-solids exports were raised for 2013 to 35.4 billion pounds but are unchanged at 36.4 billion in 2014.
Brisk skim milk powder (SMP) exports to Southeast Asia more than offset lower movement to Mexico, the largest U.S. market. It appears the United States may be supplying markets traditionally held by the European Union that have seen a decline in SMP availability from France and Germany.
The May Cold Storage report showed butter and cheese stocks well above a year ago. While it is likely that stocks will be drawn down over the remainder of 2013, the upward adjustment in stocks was carried forward through the course of this year and next, raising fats-basis ending stocks to 13.2 billion pounds this year and 12.4 billion pounds for 2014.
Likewise, skims-solids stocks were raised in June, albeit less drastically, to 12.5 billion pounds for 2013 and 12.3 billion pounds in 2014. Nonfat dry milk (NDM) production was lower through April compared with 2012, and NDM stocks were drawn down in April. But higher cheese stocks more than compensated, resulting in the higher ending stock forecast.
Price forecasts for cheese and butter were lowered in June, reflecting the accumulating stocks of these products and year-to-date prices. The 2013 cheese price range was lowered to $1.745 - $1.785 per pound. Cheese price forecasts were unchanged for 2014 at $1.675 - $1.775 per pound.
Butter prices were lowered to $1.540 - $1.610 per pound for 2013 and to $1.480 - $1.610 per pound next year, based on the high level of butter stocks and sluggish export interest. These factors are expected to impact the butter market through the first half of 2014. Whey prices were unchanged from May, but the price range was narrowed to 58.5 – 60.5 cents per pound for this year. Prices for 2014 were unchanged from May’s forecast at 56.5 – 59.5 cents per pound. NDM prices were raised to $1.600 - $1.640 per pound this year based on tightening supplies and anticipated robust exports.
NDM prices in 2014 were unchanged from May at $1.585 - $1.655 per pound. The Class IV price was lowered for both this year and next as lower butter prices more than offset NDM price strength. The Class IV price is forecast at $18.15 – $18.65 per cwt for this year and $17.75 - $18.85 per cwt for 2014.
The Class III milk price forecast was lowered to $17.80 - $18.20 per cwt but is unchanged from May at $17.00 - $18.00 per cwt for 2014. The all milk price was increased from May for both 2013 and 2014 to $19.60 - $20.00 and $18.95 - $19.95 per cwt, respectively.