WASDE: 2012 milk output lowered; prices get small boost

USDA’s World Ag Supply & Demand Estimates report lowered projected milk production for 2012, forecasting output for both 2012 and 2013 below 200 billion lbs. for the first time since March.

2012 production and marketings were projected at 199.9 billion lbs. and 198.9 billion lbs., respectively, both down 100 million lbs. from last month’s estimates. If realized, 2012 production would be up about 1.9% from 2011; marketings would be up 1.8%. The 2012 decrease reflects a slower rate of growth in milk per cow in the second half of the year. 

• 2013 milk production and marketings were estimated at 198.9 billion lbs. and 197.9 billion lbs., respectively, unchanged from last month. If realized, both would be down 0.5% from 2012.

Projected skim-solids imports were raised, but the export forecast was unchanged at 33.4 billion lbs. (skim solids basis) in 2012 and 32.5 billion lbs. in 2013.

With projected milk production lowered and demand somewhat stronger, 2012 dairy product prices were forecast higher, pulling milk prices higher, too. For 2013, the butter price forecast was reduced slightly on weaker expected demand, but forecasts for other products are unchanged. The all milk price is forecast at $17.80-$18.00/cwt. for 2012 and $17.85-$18.85/cwt. for 2013.

Potentially affecting cull cow prices, beef prices forecasts for both 2012 and 2013 were virtually unchanged. The September projection puts the 2012 average steer price at $120-$122/cwt., up $1 from last month’s forecast. The 2013 average steer price is forecast at $122-$132/cwt., unchanged.


Dairy product, milk price estimates, projections









Class III ($/cwt.)

18.37 16.75-16.95 16.70-17.70

Class IV ($/cwt.)

19.04 15.45-15.75 15.85-16.95

All milk ($/cwt.)

20.14 17.80-18.00 17.85-18.85

Cheese ($/lb.)

1.8246 1.650-1.670 1.640-1.740

Butter ($/lb.)

1.9498 1.565-1.605 1.510-1.640

NFDM ($/lb.)

1.5058 1.275-1.295 1.350-1.420

Dry whey (¢/lb.)

53.25 56.5-58.5 57.0-60.0

Source: World Ag Supply & Demand Estimates report, Sept. 12, 2012

On the cost side of the dairy equation, the 2011/12 estimated season-average corn price is $6.25/bushel, with the projected range for the 2012/13 season lowered 30¢ on both ends of the range compared to a month ago, to $7.20-$8.60/bushel.

The U.S. season-average soybean price for 2012/13 is projected unchanged at $15.00-$17.00/bushel, compared to a 2011/12 season-average price of $12.45/bushel. Soybean meal prices are projected at $485-$515/ton, up $25.00 on both ends of the range compared to last month’s forecast, and up from the 2011/12 season-average price of $397/ton.

Feed price estimates, forecasts

  Estimated Estimated Forecast
Item 2010/11 2011/12 2012/13
Corn ($/bu.) 5.18 6.25 7.20-8.60
Soybeans ($/bu.) 11.30 12.45 15.00-17.00
Soybean meal ($/tom) 346 397 485-515

 Source: World Ag Supply & Demand Estimates report, Sept. 12, 2012


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