WASDE: Milk production, price projections mostly steady

USDA’s World Ag Supply & Demand Estimates (WASDE) report, released June 12, kept projected 2013 milk production estimates steady from a month earlier, but lowered 2014 production estimates about 100 million lbs. Relatively weak milk-to-feed price ratios in the third and fourth quarter of 2013 are expected to slow production growth in the first half of 2014

• 2013 production and marketings were projected at 201.8 billion lbs. and 200.8 billion lbs., respectively. If realized, 2013 production and marketings would be up about 0.7% 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 1.3% from 2013. 

Fat-basis exports for 2013 were lowered, based on slow butter exports through April. Skim-solid exports are higher based on expectations of continued robust nonfat dry milk (NDM) exports. Fat- and skim-basis exports for 2014 are unchanged. Fat-basis imports are raised for 2013 and 2014.

Forecasts for 2013 cheese and butter prices were lowered from last month, reflecting greater stocks and weaker-than-expected prices to date. The NDM price is raised on tightening supplies and expectations of continued robust export demand. The price range for whey was narrowed.

As a result of the lower cheese price forecast, the 2013 Class III price outlook was reduced. The Class IV price is down, as lower butter prices more than offset higher NDM. 

For 2014, the butter price forecast is lowered as stocks remain high, but other product prices were unchanged. The Class III price forecast is unchanged, but the Class IV price was lowered. 

The all-milk price was forecast at $19.60 to $20.00/cwt. for 2013; and $18.95-$19.95/cwt. for 2014.


Dairy price forecasts

  Estimated Forecast Forecast
  2012 2013 2014
Class III ($/cwt.) 17.44 17.80-18.20 17.00-18.00
Class IV ($/cwt.) 16.01 18.15-18.65 17.75-18.85
All milk ($/cwt.) 18.51 19.60-20.00 18.95-19.95
Cheese ($/lb.) 1.7076 1.745-1.785 1.675-1.775
Butter ($/lb.) 1.5943 1.540-1.610 1.480-1.610
NFDM ($/lb.) 1.3279 1.600-1.640 1.585-1.655
Dry whey (¢/lb.) 59.35 58.5-60.5 56.5-59.5

Source: USDA WASDE report, June 12, 2013

Beef prices

Impacting cull cow prices, estimated 2013 beef production was raised from last month, as poor forage conditions have resulted in relatively large placements of cattle in feedlots in the first part of 2013, and cow slaughter remains high. Forecasts for 2013 beef exports were reduced, as trade to a number of markets has been relatively weak. Cattle price forecasts for 2013 were lowered $1/cwt. from last month, reflecting lower-than-expected prices to date. The 2013 steer price was estimated in a range of $125-$130/cwt.; the 2014 forecast is in a range of $128-$138/cwt. 


Feed prices

On the cost side of the dairy equation, the outlook for 2013/14 U.S. feed grain supplies was lowered this month, as delayed plantings reduce yield prospects for corn. Projected corn production is lowered 135 million bushels to 14.0 billion with the average yield projected at 156.5 bushels per acre, down 1.5 bushels from last month.  The 2013/14 season-average farm price for corn was projected at $4.40-$5.20/bushel, up 10¢ on each end of the range, but down sharply from the record $6.75-$7.15/bushel average for 2012/13. 

U.S. soybean supply and use projections for 2013/14 were unchanged from last month. The U.S. season-average soybean price for 2013/14 is forecast at $9.75-$11.75/bushel, up 25¢ on each end of the range, but down from  $14.35/bushel in 2012/13.  Soybean meal is forecast at $290-$330/ton in 2013/14, up $10 on each end. It compares to $450/ton in 2012/13.

Look for cottonseed supplies to shrink, and prices to rise. The 2013/14 U.S. cotton supply and demand balance sheet shows lower beginning and ending stocks, lower production, increased exports and higher prices relative to last month.


Feed price* outlook, season-average farm price


  Estimated Estimated Forecast
  2011/12 2012/13 2013/14
Corn ($/bushel) 6.22 6.75-7.15 4.40-5.20
Soybeans ($/bushel) 12.50 14.35 9.75-11.75
Soy meal ($/ton) 394 450 290-330

Source: USDA WASDE report, June 12, 2013

*Price paid to grower