USDA raises 2012-2013 milk production outlook; lowers price projections slightly

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Jan. 11, raised both 2012 and 2013 milk production estimates slightly from a month earlier, based on a slower decline in cow numbers and stronger milk output per cow during the fourth quarter of 2012. USDA predicts slower cow removals will continue into 2013.

• 2012 production and marketings were projected at 200.0 billion lbs. and 199.0  billion lbs., respectively, both up 300 million lbs. from December’s projections. If realized, 2012 production and marketings would be up about 1.9% from 2011. 

• 2013 milk production and marketings were raised 200 million lbs., to 199.9 billion lbs. and 198.9 billion lbs., respectively. If realized, 2013 totals would be virtually unchanged from 2012.

 

Price projections

Compared to a month ago, 2013 dairy product price projections were mixed, with producer milk prices all lower (see table below). 

2013 cheese and butter prices were reduced from last month’s forecast,  based on current price weakness and weaker expected demand. However, nonfat dry milk and dry whey price projections were raised slightly, based on current price strengthThis year’s cheese and butter prices will be close to 2012 averages, but 2013 nonfat dry milk and dry whey prices are expected to be slightly higher.

The 2012 all-milk price was estimated at $18.53/cwt., $1.61 less than 2011. Class III and Class IV prices averaged $17.44/cwt. and $16.01/cwt., respectively, down 93¢ and $3.03 compared to 2011 averages.

The 2013 projected all-milk price is in a wide range ($18.85-$19.65/cwt.), with a midpoint of $19.25/cwt., up 72¢ from 2012. Mid-range 2013 price projections for Class III and Class IV are $18.05/cwt. and $17.35/cwt., respectively.

 

 

Dairy product, milk price estimates, projections

 

Estimated

Estimated

Forecast

Product

2011

2012

2013

Class III ($/cwt.)

18.37

17.44

18.65-18.45

Class IV ($/cwt.)

19.04

16.01

16.90-17.80

All milk ($/cwt.)

20.14

18.53

18.85-19.65

Cheese ($/lb.)

1.8246

1.7076

1.710-1.790

Butter ($/lb.)

1.9498

1.5943

1.535-1.645

NFDM ($/lb.) 

1.5058

1.3279

1.455-1.515

Dry whey (¢/lb.)

53.25

59.35

61.0-64.0

Source: World Ag Supply & Demand Estimates report, Jan. 11, 2013

Feed prices

On the cost side of the dairy equation, the 2012/13 estimated season-average corn price range was unchanged (see table below), in a range of $6.80-$8.00/bushel. The U.S. season-average soybean price was projected 5¢/bushel lower on both ends of the range, at $13.50-$15.50/bushel; and soybean meal prices were projected down $10/ton compared to last month’s forecast, at $430-$460/ton.

 

Feed price estimates, forecasts

 

Estimated

Estimated

Forecast

Item

2010/11

2011/12

2012/13

Corn ($/bu.)

5.18

6.22

6.80-8.00

Soybeans ($/bu.)

11.30

12.50

13.50-15.50

Soybean meal ($/tom)

346

394

430-460

 Source: World Ag Supply & Demand Estimates report, Jan. 11, 2013

Beef prices

Impacting cull cow prices, USDA raised projected steer prices $1 on each end of the range, to $125-$134/cwt. If realized, the beef steer price would be $2-$12/cwt. higher than the 2012 average of just under $123/cwt.

USDA will release its Cattle report on Feb. 1, providing an indication of available dairy replacement heifers.