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WASDE: Little change in dairy production, price projections


USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Aug. 12, raised projected 2013 milk production estimates by 100 million lbs. from a month earlier, but again kept 2014 production estimates steady.

• 2013 production and marketings were projected at 202.1 billion lbs. and 201.1 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.9% from 2012. 

• 2014 production and marketings were projected at 204.5 billion lbs. and 203.6 billion lbs., respectively. If realized, 2014 production and marketings would be up about 1.2% from 2013. 

Exports were raised for 2013 on both a fat and skim-solids basis, as continued tight world supplies support higher exports. However, the export forecast for 2014 is unchanged. 

Fat-basis imports are raised for 2013, while the skim solid forecast is lower. Import forecasts for 2014 are unchanged.

Fat-basis ending stock forecasts for 2013 and 2014 were lowered, as lower prices are expected to support greater butter use. The skim-basis stock forecast was unchanged for 2013, but lowered for 2014, as domestic demand for nonfat dry milk (NDM) is expected to improve.

Robust demand for NDM supports increased price forecasts for 2013 and 2014. The cheese price forecast for 2013 is raised on relatively strong demand, but the forecast is unchanged for 2014. Butter prices are forecast lower for both 2013 and 2014, due to large stocks. The whey price forecast is unchanged from last month. 

As a result, the 2013 Class III price was raised from last month on the stronger cheese price, but the 2014 price is reduced on a lower butterfat price. The range of the 2013 Class IV price is narrowed for 2013, 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. 

The all-milk price for 2013 was forecast at $19.60-$19.80/cwt.; and $18.65-$19.65/cwt. for 2014.



Dairy price forecasts

  Estimated Forecast Forecast
  2012 2013 2014
Class III ($/cwt.) 17.44 17.80-18.00 16.55-17.55
Class IV ($/cwt.) 16.01 18.25-18.55 17.65-18.75
All milk ($/cwt.) 18.53 19.60-19.80 18.65-19.65
Cheese ($/lb.) 1.7076 1.750-1.770 1.630-1.730
Butter ($/lb.) 1.5943 1.495-1.535 1.445-1.575
NFDM ($/lb.) 1.3279 1.635-1.655 1.590-1.660
Dry whey (¢/lb.) 59.35 58.5-60.5 56.5-59.5

Source: USDA WASDE report, Aug. 12, 2013

Beef prices

Impacting cull cow prices, estimated 2013 beef production was raised from last month, as greater fed cattle and cow slaughter combine with heavier average carcass weights to push output higher. Moderate feed prices and recent feedlot placement of heavy animals are expected to support higher average carcass weights in the second half of the year. Fed cattle prices are reduced in 2013 and 2014, as greater beef production and attractively priced competing meats are expected to pressure prices. The 2013 steer price was estimated in a range of $123-$126/cwt., down $1 from last month. The 2014 forecast is in a range of $126-$136/cwt., down $1 on the top end from last month’s forecast.


Feed prices

With input from the August USDA Crop Production report, also released Aug. 12, the projected season-average farm price for corn was raised 10¢ at both ends of the range, to $4.50-$5.30/bushel. Prices received by farmers are expected to remain above cash bid levels through the fall as producers who forward-priced corn earlier in the year support the weighted average farm-gate price.

In its Aug. 12 Crop Production report, USDA forecast the 2013 corn harvest at 13.8 billion bushels, up 28% from 2012. If realized, this will be a new U.S. production record . Based on conditions as of Aug. 1, yields were expected to average 154.4 bushels per acre, up 31.0 bushels from 2012. If realized, this will be the highest average yield since 2009. Area harvested for grain is forecast at 89.1 million acres, unchanged from the June forecast, but up 2% from 2012. 

The U.S. season-average soybean price for 2013/14 is forecast at $10.35-$12.35/bushel, up 60¢ on both ends. Soybean meal prices are forecast at $305-$345/ton, up $15 at the midpoint. 

Soybean area for harvest is forecast at 76.4 million acres, down less than 1% from June, but up slightly from 2012. Harvested area, if realized, will be the second largest on record. The first survey-based soybean yield forecast of 42.6 bushels per acre is 1.9 bushels below last month’s projection, but 3 bushels above last year’s drought-reduced yield.  If realized, the forecasted yield will be a record high in Michigan, New York, Ohio, Pennsylvania, and Virginia.


Feed price* outlook, season-average farm price


  Estimated Estimated Forecast
  2011/12 2012/13 2013/14
Corn ($/bushel) 6.22 6.90-7.00 4.50-5.30
Soybeans ($/bushel) 12.50 14.40 10.35-12.35
Soy meal ($/ton) 394 455 305-345

Source: USDA WASDE report, Aug. 12, 2013             *Price paid to grower

Affecting cottonseed prices, USDA reduced the cotton harvest forecast to 7.70 million acres of all cotton, down 18% from 2012.


Alfalfa and alfalfa mixtures

Production of the 2013 alfalfa and alfalfa mixture dry hay crop is forecast at 59.9 million tons, up 15% from 2012. If realized, this will be the second-lowest production level since 1955. Based on Aug. 1 conditions, yield is expected to average 3.39 tons per acre, up 0.38 ton from last year. Harvested area is forecast at 17.7 million acres, up 2% from 2012. If realized, this will be the second lowest harvested area since 1948. 


Other hay

Production of other hay is forecast at 80.0 million tons, up 18% from 2012. If realized, this will be the highest production level since 2004. Based on Aug. 1 conditions, yields are expected to average 2.05 tons per acre, up 0.31 ton from last year. If realized, this will be the highest United States yield for other hay since 2004. Harvested area is forecast at 39.0 million acres, virtually unchanged from last year.