Feed prices are likely to remain moderate compared with recent years for the balance of 2013/14 and into 2014/15. Corn prices for 2013/14 are raised in May from April and forecast at $4.50-$4.80 per bushel; the price range was narrowed at the lower end, boosting the mid-point by 5 cents. Initial forecasts for the 2014/15 year call for corn prices to decline to $3.85-$4.55 per bushel. Current-year soybean meal price estimates are raised slightly from April to $485 per ton. The initial 2014/15 soybean meal price forecast is much lower, at $355-$395 per ton. The forecast is based on higher soybean plantings and yields. April’s Agricultural Prices report placed April’s preliminary price for alfalfa hay at $206 per ton, above March’s $191 price but below the April 2013 price of $213 per ton.
April’s Milk Production report shows the January-March 2014 U.S. milk production at 51.1 billion pounds, up 1 percent from the corresponding period last year. Cow numbers are forecast at 9.255 million head for 2014, unchanged from April and only slightly higher than 2013 levels. Forecast cow numbers for 2015 are for 9.34 million head. Prices for dairy replacements are ahead of year-earlier prices, and first-quarter dairy cow slaughter trails last year. However, this is a modest expansion in light of the strong profit signals to producers. Current-year output per cow also remains unchanged in May from April at 22,280 pounds per cow. Output per cow is projected at 22,710 pounds in 2015. Continued month-over-month declines in Midwestern milk output are moderated by higher milk output in the West. Increased output per cow reflects both improved producer returns and improved forage conditions, especially in the Midwest, after last year’s poor-quality harvest. Total milk production is forecast at 206.1 billion pounds this year, climbing to 212.1 billion pounds in 2015. Milk production expansion to date appears to be coming mostly from increased output per cow rather than from herd expansion.
Current-year fats basis imports are lowered 3.4 billion pounds this month based on lower than anticipated first-quarter reported imports. Lower imports of food preparation items, and to a lesser extent cheese, account for the change. The lower import pace is expected to continue into 2015. Imports on a skims-solids basis are raised to 5.4 billion pounds for the year; again, the increased import forecast is based on higher than expected first-quarter imports. Imports of casein and whey offset lower imports of milk protein concentrates. Fats basis imports are forecast at 3.4 billion pounds for 2015, unchanged from 2014. Skims-solids basis imports for 2015 are forecast at 5.1 billion pounds.
Exports on both a fats and skims-solids basis were increased in May to 13.3 and 38.7 billion pounds, respectively, for 2014. Strong first quarter export totals on both a fats and skims-solids basis account for most of the projected increases. March export results indicated single-month record-high totals. Chinese imports of both whole milk powder and skim milk powder surged in the first quarter, especially in March. Although robust global demand is expected to support high exports in 2015, higher production from competitors will likely erode U.S. exports
next year. Fats basis exports are forecast to slip to 12.7 billion pounds in 2015, and skims-solids exports will also decline slightly to 38.6 billion pounds.
Fats basis ending stocks are expected to total 10.9 billion pounds by year-end. Fats basis ending stocks will likely climb to 12 billion pounds by the end of 2015. Skims-solids ending stocks were raised to 11.9 billion pounds in the May forecast for 2014 and are expected to end 2015 at 12.2 billion pounds. Continued robust international and domestic demand is expected to limit increases in stocks despite higher expected 2015 milk production.
For 2014, the price range for cheese is narrowed from April at $1.995-$2.025 per pound. Nonfat dry milk (NDM) prices have weakened in the face of foreign competition, and the forecast is lowered slightly to $1.830-$1.860 per pound as the upper end of the price range is lowered from April. In contrast, butter and whey prices are forecast higher at $1.800-$1.860 per pound, and to 63.0-65.0 cents per pound, respectively. The price increases are based on strong year-to-date demand for these products. The Class III price is bumped up slightly to $20.55-$20.85 per cwt as whey price strength more than offsets the cheese price. The Class IV price is raised to $21.25-$21.65 per cwt as butter price strength more than balances lower NDM prices. The all milk price for 2014 is projected at $22.70-$23.00 per cwt.
Cheese prices are lowered next year to $1.670-$1.770 per pound compared with this year’s forecast. Higher milk production, both domestic and globally, is expected to soften prices from 2014 and into 2015. Likewise, butter prices are expected to slip to $1.615-$1.745 per pound in 2015. NDM prices are lowered to $1.605-$1.675 per pound. Whey prices are lowered to 55.0-58.0 cents per pound. The 2015 Class III milk price is forecast at $16.90-$17.90 per cwt and the Class IV milk price is forecast at $18.55-$19.65 per cwt. The 2015 all milk price is forecast at $19.70- $20.70 per cwt.
Source: USDA