USDA’s Aug. 12 World Ag Supply & Demand Estimates report raised 2014 and 2015 milk production estimates, as lower feed costs are expected to support higher output per cow. Price projections for 2014 were raised slightly from last month, with 2015 price estimates mostly unchanged.
On the production front:
• 2014 milk production and marketings were projected at 206.0 billion lbs. and 205.0 billion lbs., respectively. If realized, 2014 production and marketings would be up about 2.4% from 2013.
• 2015 production and marketings were projected at 212.5 billion lbs. and 211.6 billion lbs., respectively. If realized, 2015 production and marketings would be up about 3.2% from 2014.
Fat basis export forecasts for 2014 and 2015 were lowered, as Russia’s ban on imports from a number of dairy exporting countries will likely increase competition in export markets. The skim-solids export forecast was raised slightly for 2014, but reduced in 2015 as competition increases.
Fat basis imports were raised, as supplies in competing exporters are expected to be large. Skim-solids imports were unchanged from last month.
Butter and whey price forecasts (see table) were raised for 2014, with strength in butter prices expected to carry into 2015. Cheese and nonfat dry milk prices were forecast higher in 2014, but 2015 projections were unchanged from last month.
As a result, Class III and Class IV prices for 2014 were raised on stronger component product prices, and the Class III price forecast for 2015 was raised reflecting strength in whey prices. The projected all-milk price was raised to $23.55-$23.75/cwt. for 2014, but remained unchanged at $19.75-$20.75/cwt. for 2015.
Beef prices to raise
Affecting cull cow prices, latest beef steer price projections for 2014 were raised from July’s estimate, in a range of $150-$153/cwt. The 2013 steer price was estimated at $125.89/cwt.
In a range of $153-$163/cwt., fourth-quarter 2014 prices are anticipated to be the highest of the year, continuing in that range into the first half of 2015, before falling off only slightly in the later half of next year.
The forecast for beef production in 2014 was raised from last month, as lower feed prices encourage producers to raise animals to heavier weights. But, while the lower feed costs are also expected to lead to higher cattle weights in 2015, reduced feedlot numbers are expected to lead to lower slaughter, more than offsetting any gains from carcass weights.
Forecasts for 2014 and 2015 beef imports were raised as demand for processing grade beef remains strong. Exports for 2014 and 2015 were raised, as demand in a number of countries remains strong, despite high beef prices.