WASDE boosts milk output forecast

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Feb. 8, boosted both 2012 and 2013 milk production estimates from a month earlier. The increases were primarily attributed to more milk per cow, as lower forecast feed prices are expected to support higher milk yields in 2013.

• 2012 production and marketings were projected at 200.3 billion lbs. and 199.3 billion lbs., respectively. Both are up 300 million lbs. from January’s forecast. If realized, 2012 production and marketings would be up about 2.1% and 2.0%, respectively, from 2011. 

• 2013 milk production and marketings were both raised 1.1 billion lbs. from January’s projections, to 201.0 billion lbs. and 200.0 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.3% from 2012 estimates.

Fat-basis trade estimates for 2013 are unchanged. The skim-solids export estimate for 2013 is raised largely on expectations of stronger nonfat dry milk (NDM) shipments, but the import forecast is unchanged. 

Compared to a month ago, 2013 milk prices nudged slightly higher, with the outlook for product prices mixed (see Table 1). Cheese prices were unchanged from last month, but the price range was narrowed. NDM and whey prices were raised reflecting stronger demand, but the butter price was lowered. 

Despite a higher whey price, the forecast Class III price was unchanged, although the range was tightened.

Lower butter prices will more than offset by higher NDM prices, resulting in a slightly higher

forecast Class IV price. The range of all-milk price for 2013 is narrowed to $18.90-$19.70/cwt.

Feed price outlook

On the cost side of the dairy equation, the 2012/13 estimated season-average corn price range was lowered 5¢-35¢/bushel (see Table 2), in a range of $6.75-$7.65/bushel. However, the U.S. season-average soybean price was projected 5¢/bushel higher on both ends of the range, at $13.55-$15.05/bushel. Soybean meal prices were unchanged compared to last month’s forecast, at $430-$460/ton.

Beef price outlook stays strong

Even though USDA raised beef production estimates, it left the 2013 steer beef price forecast unchanged at $125-$134/cwt. Beef production is raised based mostly on heavier carcass weights, but cow slaughter in the first quarter of 2013 is expected to be relatively high.

 

Table 1. Dairy price forecasts

  Estimated Estimated Forecast
Item 2011 2012 2013
Class III ($/cwt.) 18.37 17.44 17.70-18.40
Class IV ($/cwt.) 19.04 16.01 17.00-17.80
All milk ($/cwt.) 20.14 18.51 18.90-19.60
Cheese ($/lb.) 1.8246 1.7076 1.715-1.785
Butter ($/lb.) 1.9498 1.5943 1.535-1.635
NFDM ($/lb.) 1.5058 1.3279 1.465-1.525
Dry whey (¢/lb.) 53.25 59.35 61.5-64.5

Source: USDA WASDE report, Feb. 8, 2013

 

Table 2. Feed price forecasts

  Estimated Estimated Forecast
Item 2010/11 2011/12 2012/13
Corn ($/bu.) 5.18 6.22 6.75-7.65
Soybeans ($/bu.) 11.30 12.50 13.55-15.55
Soy meal ($/ton) 346 394 430-460

Source: USDA WASDE report, Feb. 8, 2013