September 20, 2013
US milk prices forecast remains unchanged in 2014
US milk production for 2013 was reduced fractionally in September from August forecast to 201.8 billion pounds, according to the USDA''s latest "Livestock, Dairy and Poultry" report.
The production forecast for 2014 was unchanged from August at 204.5 billion pounds. The small reduction in current year production is predicated on slightly lower production in the third quarter, based on hot weather reducing production in western States, partly offset by continued production growth in the Midwest and Eastern states.
There is no basis for changing the 2014 production forecast. The 2013-14 price forecast for corn was lowered from the August projection to US$4.40-US$5.20/bushel.
Yield forecasts were raised for September, and the higher production offset lower projected carry-in stocks. Forecast corn production is now a record 13.8 billion bushels. The 2013-14 forecast soymeal price was increased in September for 2013-14 to US$360-US$400/tonne due to a lower yield forecast.
The August Agricultural Prices report places the preliminary August price for alfalfa hay at US$200/tonne, down slightly from last month and down fractionally from August 2012. Feed prices are forecast to moderate next year and the milk-feed price ratio should climb in 2014, helping to boost milkproduction.
Milk equivalent imports on a fats basis are lowered fractionally from August to 4.1 billion pounds for 2013 and are unchanged from last month at 4.1 billion pounds in 2014. Imports on a skims-solids basis were cut from August estimates to 5.2 billion pounds for 2013 on the basis of lower-than-expected milk protein concentrate imports.
The skims-solids import forecast is unchanged from August at 5.4 billion pounds for 2014. Current-year export forecasts on both a fats and skims-solids basis are increased from August to 11.0 and 38.1 billion pounds, respectively. For next year, milk equivalent exports are raised from August forecasts to 10.4 billion pounds on a fats basis and 37.3 billion pounds on a skims-solids basis. Despite an expected good production year in New Zealand, international dairy product prices remain seasonally strong. EU production is lagging and internal EU prices remain strong.
Year-to-date butter exports are robust and, given the relatively competitive US prices, should continue apace. While global dairy prices will likely moderate in 2014, the US will maintain a competitive advantage in world dairy markets.
US dairy exports will likely remain brisk to Asia and Mexico. Stronger exports and slightly higher domestic disappearance are the rationale for this month''s reduced milk equivalent stocks for 2013 on both a fats and skim-solids basis. Ending stocks were lowered for 2014, in part on the basis of lower expected carry-in stocks from 2013.
In the September forecast, price forecasts for the major dairy products are raised. Foreign demand remains firm, while a US production rebound is not expected until 2014.
Cheese prices are raised from August to US$1.755-US$1.775/pound this year and are increased for 2014 to US$1.670-US$1.770/pound. Butter prices are raised slightly for 2013 to US$1.500-US$1.540/pound and increased for next year to US$1.470-US$1.600/pound.
Stronger demand across the board tightens stocks, however, higher expected production next year lowers prices on an over-year basis for cheese and butter. Non-fat dry milk price forecasts for 2013 are raised in September to US$1.675-US$1.695/pound and to US$1.675-US$1.745/pound next year.
For the current year, whey prices are unchanged from August at US$0.585-US$0.605 per pound, increased slightly in 2014 to US$0.585-US$0.615 per pound. Milk prices are increased to reflect the higher product prices.