USDA September dairy outlook
As it always does, USDA’s monthly Livestock, Dairy & Poultry Outlook report mirrored dairy projections contained in the World Ag Supply & Demand Estimates (WASDE) report, released Sept.12.
In its sequestration-abbreviated outlook released on Sept. 18, USDA fractionally-reduced projected 2013 milk production estimates by 300 million lbs. from a month earlier, but kept 2014 production estimates unchanged. The small reduction in current year production is predicated on slightly lower production in the third quarter, based on hot weather reducing production in Western states, partly offset by continued production growth in the Midwest and Eastern states.
There is no basis for changing the 2014 production forecast. Milk production is forecast to climb in 2014 compared with this year on moderating feed prices and higher milk prices. Higher exports of cheese, butter, and nonfat dry milk and tighter stocks support the increased milk prices in 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 1.5% 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 2.7% from 2013.
To see a summary of USDA’s WASDE report, click here.
USDA’s monthly Livestock, Dairy & Poultry Outlook report also provides quarterly milk price projections (see table below). DairyBusiness Communications charts those projections with current CME futures prices for Class III & IV milk. Based on those comparisons, USDA’s outlook is substantially more bullish for Class III prices for Q3-Q4 2013 and Q1-Q2 f2014, and Class IV for Q1-Q2.
As is evident in recent federally inspected weekly cow slaughter estimates, total August 2013 monthly commercial cow slaughter (beef and dairy cows combined) will likely show a sharp decline from the August 2012 level, according to USDA’s monthly Livestock, Dairy & Poultry Outlook report. Thus far, the decline appears sharper for beef cows than dairy cows. However, if the “flash drought” in the central United States persists, it could result in more cows going to slaughter, and could temper any expansionary plans to retain beef cows or replacement heifers through the winter, as well as slowing or even reversing the decline in cow slaughter. (August cull cow slaughter estimates will be released tomorrow.)
Up until the end of July, beef cows accounted for more than half of total federally inspected cow slaughter. As beef cows are generally somewhat lighter than dairy cows, the relatively sharper decline in beef-cow slaughter will likely result in a slight increase in dressed cow weights for the near term. Reinforcing the overall effect of this potential increase, the recent declines in cow-slaughter share of total slaughter, combined with the heavier weights of fed steers and fed heifers, will likely result in heavier dressed weights for all cattle for the near term.