USDA dairy outlook: Steady

USDA’s USDA’s World Ag Supply & Demand Estimates (WASDE) report projected a small increase in 2012 milk production, but left 2013 expectations unchanged from a month ago. 

• 2012 production and marketings were projected at 199.7 billion lbs. and 198.7 billion lbs., respectively, both up 100 million lbs. from last month’s estimates. The increase reflects higher estimated milk per cow in the third quarter. If realized, 2012 production and marketings would be up about 1.8% and 1.7%, respectively, from 2011. 

• 2013 milk production and marketings were unchanged from last month at 199.7 billion lbs. and 198.7 billion lbs., respectively. If realized, 2013 production and marketings  would be unchanged from 2012. 

Fat-basis exports in both years are reduced largely on lower butterfat exports, but skim solids export forecasts are raised, largely due to whey protein product sales.

Compared to a month ago, 2012 and 2013 milk and product prices were mostly steady to mixed in a narrow range (see below).

Cheese prices are forecast lower in 2012, but the forecast is unchanged for 2013. Butter prices for

both 2012 and 2013 are lowered, as butter stocks are forecast higher than last month. Nonfat dry milk is forecast higher for both years. The whey price forecast is unchanged for 2012 but is raised for 2013. 

 

The Class III price for 2012 is unchanged, but the Class IV price forecast is lower on weaker butter prices. For 2013, higher whey and nonfat dry milk prices push the Class III and Class IV price forecasts higher. The all milk price is forecast at $18.50-$18.60/cwt. for 2012, unchanged from last month, but the forecast for 2013 is raised to $19.10-$20.00/cwt.

Dairy product, milk price estimates, projections

 

Estimated

Forecast

Forecast

Product

2011

2012

2013

Class III ($/cwt.)

18.37

17.55-17.65

17.85-18.75

Class IV ($/cwt.)

19.04

15.95-16.15

16.90-17.90

All milk ($/cwt.)

20.14

18.50-18.60

19.10-20.00

Cheese ($/lb.)

1.8246

1.720-1.730

1.735-1.825

Butter ($/lb.)

1.9498

1.605-1.635

1.610-1.730

NFDM ($/lb.) 

1.5058

1.315-1.335

1.420-1.490

Dry whey (¢/lb.)

53.25

58.5-59.5

59.5-62.5

Source: World Ag Supply & Demand Estimates report, Nov. 9, 2012

On the cost side of the dairy equation, the 2012/13 estimated season-average corn price range was lowered 15¢ to 25¢/bushel (see below). The U.S. season-average soybean price was projected 35¢/bushel lower on both ends of the range; and soybean meal prices were projected down $15/ton compared to last month’s forecast.

Feed price estimates, forecasts

 

Estimated

Estimated

Forecast

Item

2010/11

2011/12

2012/13

Corn ($/bu.)

5.18

6.22

6.95-8.25

Soybeans ($/bu.)

11.30

12.50

13.90-15.90

Soybean meal ($/tom)

346

394

455-485

 Source: World Ag Supply & Demand Estimates report, Nov. 9, 2012

Cull cow prices could find more strength, with lower cattle placements in second-half 2012 expected to result in lower steer and heifer slaughter in first-half 2013. So, 2013 steer prices were projected at $122-$132/cwt., up $1 from October’s outlook.