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WASDE: 2014 milk output to be up 1.8%

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USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Dec. 10, reduced projected 2013 milk production estimates from a month earlier based on updated cow numbers, but 2014 production estimates were raised, as higher milk forecast prices and lower expected feed costs support a more rapid increase in cow numbers and output per cow.

• 2013 production and marketings were projected at 201.6 billion lbs. (down 100 million lbs.) and 200.7 billion lbs. (unchanged), respectively. If realized, 2013 production and marketings would be up about  0.7% from 2012. 

• 2014 production and marketings were projected at 205.3 billion lbs. and 204.3 billion lbs., both up 400 million lbs. from the previous month. If realized, 2014 production and marketings would be up about 1.8% from 2013. 

Fat basis imports are reduced for 2013, but are unchanged for 2014. On a skims-solids basis, imports are raised in 2013, but unchanged for 2014.

Exports are raised on a fats basis based on the strength of butterfat shipments to non-traditional markets. On a skims-solids basis, higher nonfat dry milk (NDM) and whey exports are offset by lower lactose exports leading to a lower forecast for 2013, but for 2014, expected strength in NDM results in a higher skim-solids forecast.

For 2013, the cheese price forecast is reduced, reflecting current prices. However, strength in current prices for butter, NDM and whey resulted in higher price forecasts for those products.

For 2014, despite higher dairy production, demand strength in importing countries and improving domestic demand in the United States is expected to support prices for all products.

The Class III milk price is unchanged for 2013, as lower forecast cheese prices offset higher whey prices, but the forecast is raised for 2014 based on higher forecast cheese and whey prices. The Class IV price forecast is raised for both years on higher butter and NDM prices.

The all milk price is forecast at $19.90-$20.00/cwt. for 2013 and $19.70-$20.50/cwt. for 2014.

 

Dairy price forecasts

  Estimated Forecast Forecast
  2012 2013 2014
Class III ($/cwt.) 17.44 17.90-18.00 17.05-17.85
Class IV ($/cwt.) 16.01 18.95-19.15 19.00-19.90
All milk ($/cwt.) 18.53 19.90-20.00 19.70-20.50
Cheese ($/lb.) 1.7076 1.760-1.770 1.690-1.770
Butter ($/lb.) 1.5943 1.530-1.560 1.500-1.610
NFDM ($/lb.) 1.3279 1.695-1.715 1.715-1.775
Dry whey (¢/lb.) 59.35 58.5-59.5 55.5-58.5
 

Source:USDA WASDE report, Dec. 10, 2013

Beef prices

Affecting cull cow prices, December cattle price projections for 2014 were raised from November’s estimate, as demand for fed cattle remains strong. Beef exports were raised for both 2013 and 2014. The 2013 steer price was estimated in at $125.82/cwt. The 2014 forecast is in a range of $128-$137/cwt., up $2 on the bottom end of last month’s forecast.

 

Feed outlook

On the feed side of the equation, this week’s World Ag Supply & Demand Estimates report said U.S. corn use for 2013/14 is projected higher, with increases for food, seed and industrial use and for exports. Corn used in ethanol production is projected 50 million bushels higher, reflecting the strong pace of weekly ethanol production since mid- October. Corn used for ethanol production in the 2013-14 marketing year was estimated at 4.95 billion bushels, up from 4.90 billion bushels estimated in November, and up from 4.65 billion bushels used in 2012-13. Exports are also projected 50 million bushels higher based on the pace of sales to date and higher expected global consumption. Projected U.S. ending stocks are lowered 95 million bushels.

Even with lower ending stocks, the projected season-average farm corn price range was lowered 5¢-15¢, to $4.05-$4.75/bushel. Average prices received by farmers, however, are expected to continue to be reported above prevailing cash bids well into early 2014, as some sales will reflect the higher forward prices available before harvesting.

Although U.S. soybean production remained unchanged, 2013/14 supplies were raised 10 million bushels on stronger-than-expected early season soybean imports. Soybean exports were increased 25 million bushels to 1.475 billion, reflecting record commitments (shipments plus outstanding sales) through November.

Soybean crush was raised 5 million bushels to 1.690 billion, as strong foreign demand for soybean meal, led by the European Union and Southeast Asia, more than offsets a reduction in domestic soybean meal use. 

The U.S. season-average soybean price range for 2013/14 was projected higher, at $11.50-$13.50/bushel, up 35¢ on both ends. The soybean meal price was projected at $400-$440/ton, up $25 on both ends.

 

Feed price* outlook, season-average farm price

 

  Estimated Estimated Forecast
  2011/12 2012/13 2013/14
Corn ($/bushel) 6.22 6.89 4.05-4.75
Soybeans ($/bushel) 12.50 14.40 11.50-13.50
Soy meal ($/ton) 394 468 400-440

Source: USDA WASDE report, Dec. 10, 2013             *Price paid to grower

Source:USDA World Ag Supply & Demand
Estimates report, Dec. 10, 2013

 

Crop Report: Cottonseed

USDA’s Dec. 10 Crop Production report raised the estimated cottonseed harvest slightly. Compared to the November estimate, output was pegged at 4.367 million tons, up 10,000 tons. Even with the increase, the annual cottonseed harvest remains the smallest since 2009.

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