November 19, 2013

 

 

Based on the most recent World Agricultural Supply and Demand Estimates report, feed price forecasts continue to decline while the forecast of corn price for 2013-14 is lowered to US$4.10-US$4.90 per bushel (US$164-$196/tonne) in November 2013.

 

Lower harvested acreage is more than offset by higher yield, leading to a record production forecast. However, the soymeal price is revised higher for 2013-14 in November to US$375-US$415/tonne. Soy production forecasts for 2013-14 are raised in November based on higher yield expectations, but stronger exports of soymeal are expected to boost prices.

 

The preliminary October price for alfalfa was US$193/tonne, down fractionally from September's estimate and below the October 2012 price, according to the October Agricultural Prices report. Dairy feed ration prices will likely be lower in 2014 than 2013.

 

The National Agricultural Statistics Service estimated that the nation's herd at 9.227 million head for the July-September quarter. The US dairy herd is expected to average 9.225 million head in 2013 and increase to 9.245 million head in 2014 as producers respond to improved returns. The current-year milk yield per cow is forecast at 21,865 pounds.

 

Based on expectations that cheaper feed and abundant forages will support improved yields, milk per cow is forecast at 22,170 pounds next year.

 

Milk production this year is projected at 201.7 billion pounds, slightly lower than forecast in September. Production in 2014 is forecast at 204.9 billion pounds, based on slightly higher cow numbers next year and trend yield growth. The improved feed price outlook should lead to some herd expansion in 2014.

 

Fats-basis imports are forecast at 4.0 billion pounds for both this year and next, down fractionally from September. Imports were lowered based on slower cheese imports. The slower pace of cheese imports is expected to carry into 2014. Skims-solids basis imports for this year were reduced slightly from September to 5.1 billion pounds, based on sluggish imports of milk protein concentrates (MPC).

 

Lower imports of MPC's are expected to affect skims-solids basis imports in 2014 as well, as imports are forecast at 5.2 billion pounds. Fats-basis exports were raised in November for both 2013 and 2014 to 11.5 and 10.6 billion pounds, respectively.

 

The export increases are based on strong movement of fats-based products. Exports are reduced in 2014 from 2013 as competition from foreign producers is expected to increase. Skims-solids basis exports were raised from September to 39.1 billion pounds for 2013 and to 37.8 billion pounds in 2014, based on continued strong non-fat dry milk (NDM) exports. Skims-solids exports are projected to decline in 2014 from the current year for the same reasons that fats-basis exports are forecast to slip next year.

 

Fats-basis commercial ending stocks for 2013 and 2014 remain unchanged in November from September. However, skims-solids basis ending stocks are projected higher both this year and in 2014. Higher than previously forecast NDM stocks this year are expected to carry over into 2014, which, combined with higher production, is expected to support higher skims-solids stocks during the year.

 

Dairy product price forecasts for 2013 are projected mostly higher in November since September. Cheese, butter, and NDM prices are projected higher this year based on recent price performance and apparent robust demand.

 

Cheese prices are forecast at US$1.765-US$1.775 per pound. For 2014, the price is reduced to US$1.670- US$1.760 per pound from September. The butter price is forecast to be US$1.515-US$1.545 per pound this year and is expected to decline to US$1.465-US$1.585 per pound next year on lower exports and increased production. NDM prices are forecast at US$1.685- US$1.705 per pound this year and to climb to US$1.685-US$1.755 per pound in 2014.

 

Whey prices are reduced from the September forecast to US$0.58-US$0.59 per pound based on lower than expected year-to-date prices, and they are expected to soften to US$0.545-US$0.575 per pound in 2014.

 

The Class III price forecast is lowered this month from September to US$17.90-US$18.00 per hundredweight and lowered for 2014 to US$16.85-US$17.75 per hundredweight (cwt), based on forecast lower cheese and whey prices.

 

The Class IV price is raised from September for 2013 to US$18.80-US$19.00 per hundredweight and to US$18.60-US$19.60 per hundredweight next year, based on continued international demand for NDM. On an over-year basis, the Class IV price is forecast lower next year as skim-solids based exports are expected to decline from 2013 forecast totals. The all milk price range is narrowed from September to US$19.80-US$19.90 per hundredweight this year and dropped for 2014 to US$19.30-US$20.20 per hundredweight on the basis of expected lower 2014 Class III prices.