Milk production forecast tightened in April

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Corn price forecasts were lowered slightly from March to $6.65-$7.15 per bushel for 2012/13. Higher world grain production and lower estimated U.S. domestic feed use are the basis for the forecast. Soybean meal prices were also lowered slightly from last month to $415-$435 a ton.

Higher soybean crush increased meal supplies, which affected prices, although the increased supply is slated for export. The lower price for concentrate feeds along with a slightly higher expected all milk price will improve producer margins somewhat. The improvement is not large enough to boost herd size.

Consequently, herd size is projected at 9,195 thousand for 2013, unchanged from March’s forecast and below 2012’s average herd size. Output per cow for the year was lowered in April to 21,945 pounds, based on lower February milk per cow data. Based on forecast herd size and output per cow, production is projected at 201.8 billion pounds for 2013.

Milk equivalent imports on both a fats and skims-solids basis were lowered in April’s forecast. Fats-basis imports are now placed at 3.9 billion pounds for the year, while skims-solids imports are forecast at 5.3 billion pounds. Fats-basis imports were lowered based on lower expected imports of anhydrous products, and skims-solids basis imports were lowered based on lower expected imports of milk protein concentrates.

Fats-basis exports are unchanged from the March forecast at 9.4 billion pounds. Skims-solids exports were unchanged at 34.4 billion pounds for the year. The price differential between U.S. and world nonfat dry milk (NDM) prices will likely strengthen exports in the second half of the year. Both fats- and skim-solids export forecasts represent increases above 2012 totals.

Fats-basis ending stocks were raised to 11.4 billion pounds as butter stocks persisted at higher than expected quantities. Skims-solids ending stocks were trimmed in April to 11.5 billion pounds as stronger expected second-half NDM exports and domestic demand are expected to tighten stocks by year-end. Prices for cheese, butter, NDM and whey are all forecast higher in April as lower forecast milk production and strength in demand are firming prices.

Cheese prices are forecast at $1.735-$1.785 per pound. The butter price forecast was raised to $1.560-$1.640 per pound. In light of the export forecast, NDM prices were boosted to $1.585-$1.625 per pound and whey prices were raised slightly to 60.5-63.5 cents per pound. Higher dairy product prices provided a lift to milk prices in April’s forecast.

Class IV milk is forecast at $18.10-$18.70 per cwt, and Class III prices were increased to $17.85-$18.35 per cwt. The all milk price forecast is $19.45- $19.95 per cwt.

Source: USDA's Livestock, Dairy and Poultry report



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