Milk production outlook raised; price projections change little

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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.

 

Feed situation

In addition to USDA’s WASDE report, the Aug. 12 Crop Production report also figures into the feed price outlook. Read Corn, soybean production estimates raised; more alfalfa, too

Corn supplies for 2014/15 are projected at a record 15.243 billion bushels, with the increase in production partly offset by a 65-million-bushel reduction in beginning stocks. Corn use for ethanol and exports are raised 45 million bushels and 20 million bushels, respectively, for 2013/14, based on reported data to date. Projected corn use for 2014/15 is higher, with use for ethanol and exports each raised 25 million bushels, and feed and residual disappearance 50 million bushels higher with the larger crop. Projected ending stocks for 2014/15 are raised slightly to 1.808 billion bushels.

The 2014/15 projected season-average farm price for corn was lowered 10¢ at both ends of the range, to $3.55-$4.25/bushel (see table). The 2013/14 range was estimated at $4.40-$4.50/bushel.

Soybean supplies for 2014/15 are projected slightly above last month, based on the higher production forecast. With minimal supply gains, soybean exports and crush are unchanged, leaving ending stocks projected at 430 million bushels.

The U.S. season-average soybean price for 2014/15 was forecast in a wide range – $9.35 to $11.35/bushel, down 15¢ on both ends of the range compared to a month ago. Soybean meal prices were forecast at $340 to $380/ton in 2014/15, down $10 at the midpoint.

Also impacting feed prices, the Crop Production report estimated production of alfalfa and alfalfa mixture dry hay for 2014 at 63.6 million tons, up 11% from 2013. Production of other hay is forecast at 77.2 million tons, down 1% from 2013.

And, the cottonseed harvest was estimated at 5.777 million tons, the largest harvest since 2010.

 

USDA dairy price forecasts 

 

 

 

 

Estimated

Estimated

Forecast

Forecast

Product   

2012

2013

2014

2015

Class III ($/cwt)

17.44

17.99

21.25-21.45

17.00-18.00

Class IV ($/cwt)

16.01

19.05

22.35-22.65

18.70-19.80

All milk ($/cwt)

18.52

20.05

23.55-23.75

19.75-20.75

Cheese ($/lb.)

1.7076

1.7683

2.050-2.070

1.670-1.770

Butter ($/lb.)

1.5943

1.5451

2.040-2.080

1.655-1.785

NFDM ($/lb.)

1.3279

1.7066

1.845-1.865

1.605-1.675

Dry whey (¢/lb.)

59.35

59.02

64.0-66.0

56.5-59.5

Source: USDA World Ag Supply & Demand

 

 

Estimates report, Aug. 12, 2014

 

 

 

 

 

 

 

 

USDA feed price* outlook

 

 

 

 

Estimated

Estimated

Forecast

Forecast

Product

2011/12

2012/13

2013/14    

2014/15

Corn ($/bu.)

6.22

6.89

4.40-4.50

3.55-4.25

Soybeans ($/bu.)

12.50

14.40

13.00

9.35-11.35

Soy meal ($/ton)

394

468

470

340-380

*U.S. average price paid at the farm level

 

 

Source: USDA World Ag Supply & Demand

 

 

Estimates report, Aug. 12, 2014

 

 

 

 

 

 

 

 

 


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