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WASDE 2012/2013 dairy picture: Slight improvement

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By Dave Natzke

 

USDA’s World Ag Supply & Demand Estimates report lowered projected milk production for 2012, but gave a slight boost to 2013 expectations, based on the outlook for slightly lower feed prices.

 

2012 production and marketings were projected at 199.6 billion lbs. and 198.6 billion lbs., respectively, both down 300 million lbs. from last month’s estimates. If realized, 2012 production and marketings would be up about 1.7% from 2011. The 2012 decrease reflects a slower rate of growth in milk per cow in the remainder of the year, more than offsetting a slower-than-expected decline in cow numbers during the last quarter. 

 

• 2013 milk production and marketings were estimated at 199.7 billion lbs. and 198.7 billion lbs., respectively, up 800 million lbs. from last month. If realized, both would be virtually unchanged from 2012. Higher forecast milk prices in late 2012 and into 2013 are expected to slow the rate of decline in cow numbers and help support higher growth in milk per cow in 2013.

 

Fat-basis exports for 2012 were lowered, but skim solids exports were forecast higher. Exports for 2013 were unchanged from last month.

 

Product prices are forecast higher for 2012 and 2013, as recent strength in dairy product demand is expected to carry into 2013. Price forecasts for butter, cheese, nonfat dry milk and whey were all raised from last month (see table). With higher product prices, both the Class III and Class IV price forecasts were raised. The all-milk price is forecast at $18.50-$18.60/cwt. for 2012 and $19.00-$19.90/cwt. for 2013.

 

Potentially affecting cull cow prices, beef prices forecasts for both 2012 and 2013 were virtually unchanged. The September projection puts the 2012 average steer price at $121.72/cwt.; the 2013 average steer price is forecast at $122-$132/cwt.

 

 

Dairy product, milk price estimates, projections

 

Estimated

Forecast

Forecast

Product

2011

2012

2013

Class III ($/cwt.)

18.37

17.55-17.65

17.75-18.65

Class IV ($/cwt.)

19.04

16.00-16.20

16.75-17.75

All milk ($/cwt.)

20.14

18.50-18.60

19.00-19.90

Cheese ($/lb.)

1.8246

1.725-1.735

1.735-1.825

Butter ($/lb.)

1.9498

1.615-1.645

1.625-1.745

NFDM ($/lb.) 

1.5058

1.310-1.330

1.390-1.460

Dry whey (¢/lb.)

53.25

58.5-59.5

58.5-61.5

Source: World Ag Supply & Demand Estimates report, Oct. 11, 2012

On the cost side of the dairy equation, the 2011/12 estimated season-average corn price is $6.22/bushel, with the projected range for the 2012/13 season lowered 10¢ on both ends of the range compared to a month ago, to $7.10-$8.50/bushel.

The U.S. season-average soybean price for 2012/13 is projected 75¢ lower on both ends of the range, to $14.25-$16.25/bushel, compared to a 2011/12 season-average price of $12.50/bushel. Soybean meal prices are projected at $470-$500/ton, down $15.00 on both ends of the range compared to last month’s forecast, but up well above the 2011/12 season-average price of $393.50/ton.

Feed price estimates, forecasts

 

Estimated

Estimated

Forecast

Item

2010/11

2011/12

2012/13

Corn ($/bu.)

5.18

6.22

7.10-8.50

Soybeans ($/bu.)

11.30

12.50

14.25-16.25

Soybean meal ($/tom)

346

394

470-500

 Source: World Ag Supply & Demand Estimates report, Oct. 11, 2012

Read also: October USDA Crop Production report

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