2015 milk prices now looking more like 2013, 2011

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Like last week’s World Ag Supply & Demand Estimates report, USDA’s Livestock, Dairy & Poultry Outlook report forecasts a building U.S. dairy herd and lower overall prices moving into 2015. For now, however, the dairy price train keeps rumbling along.

Attractive feed and milk prices have provided an incentive for producers to raise milk production. Forecast milk cow numbers are unchanged from last month’s forecast, at 9.26 million head for 2014 and 9.34 million head next year. High replacement heifer prices and strong cull cow prices may have dampened the expansion.

Milk per cow is increased from July for both this year and next, to 22,250 lbs. and 22,760 lbs., respectively, based on relatively lower feed costs and improved forage in much of the country. Total U.S. milk production is projected to grow to 206.0 billion lbs. in 2014 (up about 2.4% from 2013), and to 212.5 billion lbs. in 2015 (up about 3.2% from 2014 projections).

2014 Class III milk prices are projected in a range of $21.25-$21.45/cwt. this year, falling to $17.00-$18.00/cwt. in 2015.

Current-year Class IV prices were raised this month to $22.35-$22.65/cwt., and are then expected to fall to $18.70-$19.80/cwt. in 2015.

The all milk price is forecast at $23.55-$23.75/cwt. in 2014, slipping to $19.75-$20.75/cwt. next year.

Even if 2015 prices fall to projected levels, they would be on par with 2013 and 2011 averages.

Dairy Herd Management provides quarterly USDA price forecasts and current Chicago Mercantile Exchange (CME) closing futures price averages below. While CME prices appear more bullish than USDA projections for 2014, the USDA forecasts were calculated prior to last week’s run-up in cheese, butter and milk futures prices.

 

Milk price averages & forecasts, $/cwt., Aug. 18, 2014

 

 

All milk

Class III

Class III

Class IV

Class IV

 

USDA1

CME2

USDA1

CME2

USDA1

2009

12.83

 

11.36

 

10.89

2010

16.26

 

14.41

 

15.09

2011

20.14

 

18.37

 

19.04

2012

18.53

 

17.44

 

16.01

2013

20.05

 

17.99

 

19.05

2014

 

 

 

 

 

    Q1

24.53

22.61

22.61

23.14

23.10

    Q2

24.23

22.75

22.75

23.04

23.04

    Q3

23.60-23.90

22.04

21.00-21.30

22.84

22.95-23.35

    Q4

21.85-22.45

19.87

18.70-19.30

19.39

20.40-21.10

Year*

23.55-23.75

21.82

21.25-21.45

22.10

22.35-22.65

2015

 

 

 

 

 

    Q1

20.65-21.55

18.04

16.60-17.50

17.69

18.20-19.20

    Q2

18.95-19.95

17.92

16.85-17.85

17.59

18.50-19.60

    Q3

 

18.07

 

17.01

 

    Q4

 

18.04

 

17.00

 

Year*

19.75-20.75

18.02

17.00-18.00

17.32

18.70-19.80

1/ USDA prices and forecasts from Livestock, Dairy & Poultry

Outlook report (www.ers.usda.gov), issued Aug. 18, 2014.

2/ Simple average of Chicago Mercantile Exchange

 

 futures prices at close of trading on Aug. 18, 2014.

 

* Average may include actual federal milk marketing

 

order Class III and Class IV prices for affected months.

 

 

NFO: Cull ’em, don’t keep ’em

At least one farm organization is urging dairy farmers to take advantage of current beef prices and slow or reverse any dairy herd expansion. As the peak of summer grilling season approaches this Labor Day, the National Farmers Organization (NFO) urged dairy producers to consider culling herds now, while consumer hamburger demand—and thus, prices, remain high.

“We have more than 20 years of experience helping producers market their cull cows, and our seasoned pros believe this is the time to consider culling for maximum financial benefit,” said NFO director of livestock marketing Garry Crosby.

Crosby cited reasons beyond consumer hamburger demand, including:

•  Marketed cow numbers are lower than usual, translating into higher prices

•  Midwest capacity to market culls is expected to fall by 3,000 head per day because of packer location closures

•  Western stock cow marketing this fall could mean lower price levels

•  Milk quality standards are increasing, making culling a good choice for problem animals

•   Culling now will help keep milk pay price levels strong.

 

Turlock Livestock Auction Yard

Dairy replacement sales results from Turlock, Calif., on Aug. 15. Receipts on 1,305 head. Sale consisted of 80 % Jerseys and 20 % Holstein Heifers. Weigh cows and bulls steady with a week ago. Prices $/head unless otherwise noted:

 

Springers

#1 Holstein: 2200-2800

#2 Holstein: 1600-2100

# 1 Jersey: 1800-2200

# 1 Jersey-X: 1500-2100

 

Holstein bred heifers: 1775-1825

 

#1 Holstein open heifers:

549-629 lbs.: 975-1085

819-892 lbs.: 1310-1385

 

Jersey bred heifers: 1475-1600

 

Jersey open heifers:

325 lbs.: 785

455-463 lbs.: 910-960

500-570 lbs.: 1100-1110

 

Weigh dairy cows

Top yielding: 100-121/cwt.

Medium yielding: 82-98/cwt.

Low yielding: 55-81/cwt.

 

 



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