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DairyProfit Update for April 10, 2012

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2012 U.S. milk production, marketings to top 200 billion lbs.

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released April 10, raised both 2012 milk production and marketing estimates to more than 200 billion lbs., again pressuring 2012 milk and dairy product price projections lower.

Total 2012 milk production is now estimated at 201.1 billion lbs., up 1.4 billion lbs. from last month’s estimate, due to higher-than-expected cow numbers and more milk production per cow. Compared to last month’s estimates, the milk production forecast was raised for every quarter of 2012. If realized, 2012 production would be 2.50% more than 2011 actual production. 

Estimated 2012 milk marketings, at 200.2 billion lbs., were raised 1.5 billion lbs. from last month. If realized, 2012 marketings would be up 2.5% from 2011.

With higher forecast 2012 milk production and weaker-than-expected product demand, price forecasts for cheese, butter, NDM and whey were lowered. As a result, annual average Class III, Class IV and all milk price forecasts were reduced from last month. According to the USDA forecast, the 2012 all milk price will be in a range $17.25-$17.75/cwt.

 

Buying feed? USDA projects higher 2012 prices

With the numbers digested from the 2012 Prospective Plantings report on March 30, further analysis of potential 2012 crops and prices is underway. USDA’s World Ag Supply & Demand Estimates (WASDE) report, released April 10, points to little change in the corn outlook, but reduces anticipated soybean supplies.

For dairy producers buying feed, USDA narrowed the range for the season-average (2011-12) corn price forecast (paid to growers), at $6.00-$6.40/bushel. That compares to $5.18/bushel in 2010-11 and $3.55/bushel in 2009-10.

The projected 2011/12 U.S. season-average soybean price was raised to $12.00-$12.50/bushel, up 25¢ on the mid-range forecast from last month. That compares to $11.30/bushel in 2010-11 and $9.59/bushel in 2009-10.

Soybean meal prices were forecast at $335-$355/ton, up $20 on the mid-range. That compares to $345.50/ton in 2010-11 and $311.25/ton in 2009-10.

 

U.S. rebuilding corn supply, but at cost to soybeans

According to analysis from American Farm Bureau Federation economist Todd Davis, today’s USDA World Ag Supply & Demand Estimates report (WASDE) indicates the United States is in rebuilding mode in regard to the nation’s corn supply. However, soybean supplies are likely to move in the opposite direction and become much tighter next year.

 

Estimated U.S. corn ending stocks for the 2011-12 marketing year, at 801 million bushels, results in a 6.3% stocks-to-use ratio, or roughly a 23-day supply of corn available at the end of August. At the world level, corn ending stocks for the 2011-12 marketing year will be the tightest since the 2006-07 marketing year with a stocks-to-use ratio of 14.2%, which was the tightest ending corn inventory in recent history.

 

MARKETS: Class III futures steady

Today's market closing prices:

Cheddar barrels: unchanged at $1.46/lb.

Cheddar blocks: unchanged at $1.4875/lb.

Butter: down 0.5¢, to $1.4250/lb.

Extra Grade nonfat dry milk: unchanged, at $1.2575/lb.

Grade A nonfat dry milk: unchanged, at $1.2675/lb.

Class III milk: Mixed in a (very) narrow range through April 2013. Based on current closing prices, the 2012 average is $16.16/cwt.; 2013 average is $16.11/cwt. 

 

Grain futures mostly lower

Corn: -7¢ to -15¢/bushel through December 2012. The 2012 average is $5.91/bu.; 2013 average is $5.56/bu.

Soybeans: -5¢ to -17¢ through November 2012. The 2012 average is $14.05/bu.; 2013 average is $13.12/bu.

Soybean meal: -$3.60 to +$1.00 through December 2012. The 2012 average is $379.88/ton; 2013 average is $340.75/ton.

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