USDA October reports: Another mixed bag for dairy
By Dave Natzke
Based on an expanding dairy herd and increased milk per cow, USDA’s World Ag Supply & Demand Estimates (WASDE) report raised its milk production forecast for 2011, but reduced expectations for 2012 due to the impact of lower milk prices and weakening milk-feed ratios that could pressure cow numbers and feeding management.
Total 2011 milk production and marketings were increased by 200 million lbs. from last month’s forecast, to 195.9 billion lbs. and 195.0 billion lbs., respectively. If realized, 2011 production would be 1.5% more than 2010 actual production.
Projected 2012 production and marketings decreased by 100 million lbs. from last month’s forecast, to 198.4 billion lbs. and 197.5 billion lbs., respectively. If realized, 2012 production would be 1.3% more than 2011 projections.
Fat basis exports were lowered for 2011 on slightly weaker butter and cheese exports, but are unchanged for 2012. Skim solids exports are unchanged for 2011, but were lowered for 2012. Import forecasts are unchanged.
Butter and cheese prices are forecast lower for both 2011 and 2012. The 2011 nonfat dry milk (NDM) price forecast is unchanged, but reduced for 2012 due to pressure from weakening international prices. Whey prices are raised for both 2011 and 2012 as demand is strong.
As a result of those product prices, the Class III price is lowered for 2011 (see below), but higher whey price will more than offsets a decline in the cheese price in 2012, pushing Class III prices up from last month’s forecast. The Class IV price is lowered for both years due to lower forecast butter and NDM prices. The all milk price forecast is lowered to $20.00 to $20.10/cwt. for 2011, and $17.75-$18.65/cwt. for 2012.
Dairy price forecasts
Product 2010 2011 2012
Class III ($/cwt.) 14.41 18.15-18.25 16.30-17.20
Class IV ($/cwt.) 15.09 19.05-19.25 16.30-17.30
All milk ($/cwt.) 16.29 20.00-20.10 17.75-18.65
Cheese ($/lb.) 1.5226 1.810-1.820 1.665-1.775
Butter ($/lb.) 1.7020 1.940-1.970 1.600-1.720
NFDM ($/lb.) 1.1687 1.505-1.525 1.355-1.425
Dry whey (¢/lb.) 37.16 51.5-52.5 45.5-48.5
Source: USDA Economic Research Service World Ag Supply & Demand Estimates report, Oct. 12, 2011
Beef price projections raised
Impacting cull cow prices, the 2011 cattle (steer) price forecast was raised slightly, at $112.73/cwt.; 2012 projections were raised $2/cwt., to $112-$121/cwt.
Demand remains stronger-than-expected, and the strength is expected to carry into 2012.
Beef import forecasts were lowered in 2011 and 2012, as strong demand for beef by competing importers limits U.S. shipments. The U.S. beef export forecast is raised as the strong demand in a number of countries is expected to support continued growth in U.S exports.
Feed price projections lowered
USDA’s WASDE report projected the 2011/12 U.S. season-average farm price for corn at $6.20-$7.20/bushel, down 30¢ on both ends of the range compared to a month ago.
The projected 2011/12 U.S. season-average soybean price remains in a wide range, $12.15-$14.15/bushel, down 50¢/bushel on both ends of the range. Soybean meal prices are forecast at $335-$365/ton for 2011/12, down $25/ton on both ends of the range.
The WASDE report was issued simultaneously with the USDA Crop Production report, providing insights into USDA’s crop production, use and supply estimates.
Corn production is forecast at 12.4 billion bushels, down 1% from the September forecast and down slightly from the 2010 production estimate. If realized, this will be the fourth largest U.S. production total on record. Based on conditions as of Oct. 1, yields are expected to average 148.1 bushels per acre, unchanged from the September forecast, but down 4.7 bushels from 2010. If realized, this will be the lowest average yield since 2005. Area harvested for grain is forecast at 83.9 million acres, down 1%t from the September forecast.
The Oct. 1 corn objective yield data indicate the second highest number of ears per acre on record for the combined 10 objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin), only behind the record high year of 2009. Record high ear counts are forecast in Iowa, Illinois, Ohio and Wisconsin.
For 2010/11, corn feed and residual use is lowered 197 million bushels based on the September 1 stocks estimate and other changes to 2010/11 use and supplies. USDA’s WASDE report increases U.S. 2011/12 feed grain supplies this month, as higher beginning stocks more than offset lower forecast production. Beginning stocks for 2011/12 are raised 208 million bushels from the previous projection. Corn supplies for 2011/12 are forecast 144 million bushels higher. Total U.S. corn use for 2011/12 is projected 50 million bushels lower, due to reduced exports.
Global coarse grain supplies for 2011/12 are projected 10.4 million tons higher with more than half of the increase reflecting the 5.3-million-ton increase in U.S. corn beginning stocks. Global corn production is raised 5.4 million tons with foreign production increases more than offsetting the U.S. reduction.
Soybean production is forecast at 3.06 billion bushels, down 1% from September and down 8% from last year. Based on Oct. 1 conditions, yields are expected to average 41.5 bushels per acre, down 0.3 bushel from last month and down 2 bushels from last year. If realized, the average yield will be the second lowest since 2003. Area for harvest is forecast at 73.7 million acres, down slightly from September and down 4% from 2010.
The October objective yield data for the combined 11 major soybean-producing states (Arkansas, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Ohio, and South Dakota) indicate a lower pod count compared with last year, as late planting this spring has led to slower than normal development throughout the growing season. Compared with final counts for 2010, pod counts are down in all states except Kansas, with decreases of more than 200 pods per 18 square feet in Arkansas, Indiana and Missouri. The largest decrease from 2010’s final pod count is expected in Arkansas, down 399 pods per 18 square feet.
U.S. soybean exports for 2011/12 are reduced 40 million bushels to 1.375 billion reflecting the slow pace of export sales and strong early season export competition from South America. The
September 1 stock estimate of 215 million bushels indicated higher-than-expected residual use for 2010/11. As a result, the 2011/12 residual use is projected at 32 million bushels, up 9 million from the previous estimate. Soybean ending stocks are projected at 160 million bushels, down 5 million from last month.
Global soybean production is projected at 258.6 million tons, down 0.4 million mainly due to
the lower U.S. crop.
USDA forecasts a cottonseed harvest of about 5.572 million tons, up about 10 million tons from September and down about 526.1 million tons from 2010. Drought conditions in many of the cotton growing areas have negatively impacted this year’s crop, and the acreage abandonment rate will be the highest on record.
Production of dry alfalfa and alfalfa mixtures is forecast at 64.7 million tons, down fractionally from the Aug. 1 forecast and down 5% from last year. Based on Oct. 1 conditions, yield is expected to average 3.35 tons per acre, down 0.01 ton from Aug. 1 and 0.05 ton from last year. Harvested area is forecast at 19.3 million acres, unchanged from June, but down 3% from the previous year’s acreage.
Adequate rainfall in portions of the West led to increases in expected yields, with a record-setting yield forecast for Idaho, where warmer temperatures this fall allowed producers a longer haying season. Elsewhere, predominately hot, dry weather in the Four Corners region and Southern Great Plains adversely affected much of the alfalfa crop. Producers in Oklahoma are expected to harvest the lowest alfalfa yield since 1956, while producers in Texas are expecting the lowest yield since 1970.
Production of other dry hay is forecast at 67.0 million tons, down fractionally from the Aug. 1 forecast and down 14% from last year. If realized, this will be the lowest production level since 1993. Based on Oct. 1 conditions, yields are expected to average 1.75 tons per acre, unchanged from the Aug. 1 forecast, but down 0.20 ton from last year. If realized, this will be the lowest U.S. yield since 1988. Harvested area is forecast at 38.3 million acres, unchanged from June, but down 4 percent from last year.
Abundant late-August and early-September rainfall stemming from Hurricane Irene and Tropical Storm Lee led to increased growth in many pastures and grass hay fields in the Delta, Tennessee Valley and several states along the Mid-Atlantic Coast. Elsewhere, continued hot, dry weather throughout much of the Great Plains and Southwest led to further declines in expected yields. The historic drought experienced by producers in Oklahoma and Texas has negatively impacted hay fields, leading to the lowest expected yield since 1956 for both states.
Find the USDA Crop Production report at www.usda.gov/nass/PUBS/TODAYRPT/crop1011.pdf.
Find the WASDE report at www.usda.gov/oce/commodity/wasde/latest.pdf.