USDA: U.S. Forecast to Produce Record-High Milk Output

Milk prices to remain strong; record corn crop also expected.

USDA anticipates record-high levels of U.S. milk production for both 2013 and 2014, according to today’s World Agricultural Supply and Demand Estimates (WASDE) report. 

This year’s milk output is expected to reach 202.1 billion pounds, up from 200.3 billion pounds in 2012 and from 196.2 billion pounds in 2011, USDA noted. Production in 2014 is forecast to rise to a whopping 204.5 billion pounds.

"This shows that farmers will rise to the challenge," says dairy analyst Robin Schmahl of AgDairy Market LLC. "With lower feed prices, dairy producers will push production. Those who are now in the dairy business are there to stay. They are not making money hand over fist, but many are making money."

USDA projected the All-Milk price for 2013 at $19.60 to $19.80 per cwt., and at $18.65 to $19.65 per cwt. for 2014.

U.S. dairy producers won’t be the only American farmers churning out record production. USDA also projects that U.S. farmers will harvest a record corn crop of 13.76 billion bushels in 2013, up 28% from last year and 5% percent larger than the previous record crop, reports the Renewable Fuels Association (RFA). USDA expects that farmers will achieve a national average yield of 154.4 bushels per acre.

"That would be the third-highest yield on record, despite farmers experiencing one of the slowest, wettest planting seasons on record," said RFA.

U.S. soybean production is forecast at 3.26 billion bushels in 2013, up 8% from last year. Cotton production is projected to fall 25% from 2013, while the wheat crop will drop by 7%.

In other dairy estimates, USDA also raised its projections for 2013 exports as continued tight world supplies support higher shipments to overseas markets. However, the export forecast for 2014 remains unchanged. Keeping next year’s export numbers steady surprised Schmahl. "We’ve been seeing an increase in exports," he says. "Exports were up in all categories in June. Our prices are comparable to world prices, so we can move product."

USDA also anticipates "robust demand" for nonfat dry milk (NDM) this year and next. The 2013 cheese price forecast increased on relatively strong demand, but the 2014 forecast remains unchanged. USDA also lowered its outlook for butter prices for both 2013 and 2014 as stocks remain relatively high. 

For 2013, USDA raised the Class III price from last month to $17.80-$18.00 per cwt. on the stronger cheese price. The 2014 price outlook, however, is reduced to $16.55-$17.55 per cwt. on a lower butterfat price. The range of the 2013 Class IV price is narrowed for 2013 to $18.25-$18.55 per cwt. but is unchanged at the midpoint as the lower butter price is largely offset by the higher NDM price. The 2014 Class IV price is unchanged $17.65-$18.75.