According to the USDA's latest Livestock, Dairy and Poultry report, Corn prices were reduced slightly on the upper end of the projected price range from February in the March USDA World Agricultural Supply and Demand Estimates report.

Corn prices are forecast at $6.75-$7.45 per bushel. Soybean meal prices were lowered from February to $425-$445 per ton in March. Although record-high at the beginning of the year, forage prices are likely to moderate in the se cond half of 2013.

The number of dairy cows was raised from last month’s estimate. Despite a poor milk-feed price ratio, January cow numbers were higher than expected. Forecast cow numbers were raised from last month for the first half of 2013 and lowered from last month for the second half of the year.

The U.S. dairy herd is expected to average 9,195 thousand cows for 2013, a contraction from 2012 but higher than February’s forecast. Output per cow was raised slightly to 21,960 pounds, based on higher milk per cow in the first quarter.

The most recent Milk Production report showed slightly higher year-over-year milk per cow in January for the 23 surveyed States. As a result of the higher milk per cow and a slightly higher average herd size than earli er forecast, 2013 milk production was raised to 201.9 billion pounds. The net additional milk output will help keep a lid on milk prices and continue pressure on producer margins.

Both fat and skims-solids basis imports were unchanged this month; at 4.0 and 5.4 billion pounds respectively. Fat basis exports were raised to 9.4 billion pounds based on likely butter exports through the first part of 2013, but the exports are expected to flag toward the end of 2013. Skims-solids exports were raised to 34.4 billion pounds for the year.

The increase is predicated on expected nonfat dry milk (NDM) exports. The apparent unfolding drought conditions in New Zealand could support greater U.S. exports later this spring if they continue into New Zealand’s next marketing year. U.S. NDM stocks appear ample for filling any gap resulting from New Zealand ’s drought.

Year-end stocks on both a fat and a skims-solids basis were unchanged from last month. However, second-quarter ending stocks were raised slightly based on lower expected domestic disappearance.

Skims-solids stocks were raised for the first quarter based on greater NDM stocks that are expected to decline as NDM exports accelerate later in the year. Cheese prices have been lowered in March to $1.710-$1.770 per pound as production increases, but demand is expected to remain steady. The same supply-demand fundamentals apply to whey prices, which were lowered to 60.0-63.0 cents per pound.

Butter prices are forecast at $1.540-$1.630 per pound, unchanged from last month. NDM prices were raised from last month to $1.505 to $1.555 per pound based on the export outlook for later in 2013. The Class III price is forecast at $17.55-$18.15 per cwt based on lower cheese and whey prices. The Class IV price is raised to $17.35-$18.05 per cwt as a higher export forecast supports butter and NDM prices.

The all milk price is projected at $19.00-$19.60 per cwt, little changed from last month. Despite greater milk production forecast in March, stronger exports are expec ted to support the projected all milk price at close to February’s forecast and above the 2012 all milk price.