WASDE: 2012 U.S. milk production, marketings to top 200 billion lbs.
By Dave Natzke
USDA’s World Ag Supply & Demand Estimates (WASDE) report, released April 10, raised both 2012 milk production and marketing estimates to more than 200 billion lbs., again pressuring 2012 milk and dairy product price projections lower.
Total 2012 milk production is now estimated at 201.1 billion lbs., up 1.4 billion lbs. from last month’s estimate, due to higher-than-expected cow numbers and more milk production per cow. Compared to last month’s estimates, the milk production forecast was raised for every quarter of 2012. If realized, 2012 production would be 2.50% more than 2011 actual production.
Estimated 2012 milk marketings, at 200.2 billion lbs., were raised 1.5 billion lbs. from last month. If realized, 2012 marketings would be up 2.5% from 2011.
The April WASDE report also raised the skim solids export forecast, based on stronger nonfat dry milk (NDM) sales, but reduced the fat-basis export forecast, due to lower butter exports. Skim solids import estimates were also raised. Ending stocks forecasts were raised on both a fat and skim-solids basis.
With higher forecast 2012 milk production and weaker-than-expected product demand, price
forecasts for cheese, butter, NDM and whey were lowered (see table). As a result, annual average Class III, Class IV and all milk price forecasts were reduced from last month. According to the USDA forecast, the 2012 all milk price will be in a range $17.25-$17.75/cwt.
2009-2012 dairy price estimates, forecast
Actual Estimated Forecast
Product 2009 2010 2011 2012
Class III ($/cwt.) 11.36 14.41 18.37 16.10-16.60
Class IV ($/cwt.) 10.89 15.09 19.04 15.35-15.95
All milk ($/cwt.) 12.83 16.26 20.14 17.25-17.75
Cheese ($/lb.) 1.2963 1.5226 1.8246 1.59-1.64
Butter ($/lb.) 1.2094 1.7020 1.9498 1.49-1.57
NFDM ($/lb.) 0.9222 1.1687 1.5058 1.30-1.34
Dry whey (¢/lb.) 25.84 37.16 53.25 55.0-58.0
Source: USDA Economic Research Service World Ag Supply & Demand Estimates report, April 10, 2012
Beef price forecasts
Higher beef prices remain an incentive to cull cows. Potentially impacting cull cow prices, the WASDE 2012 cattle (steer) price estimate was reduced $1/cwt. on the high end of the range, to $124-$130/cwt. It's still $10-$15/cwt. higher than 2011’s average of $115/cwt. Highest prices of the year are forecast for the final quarter of 2012. Higher mid-year production will offset lower-than-expected slaughter in the first quarter.
To see the full report, visit www.usda.gov/oce/commodity/wasde/latest.pdf.