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Friday, December 15, 2017
 A Downward Trend in Skim-Milk Powder Exports Offsets Rises in Cheese and Whole Milk Powder Exports  

USDA’s Livestock, Dairy & Poultry Outlook report mirrored last week’s World Ag Supply & Demand Estimates report.

Feed price forecasts are changed only slightly from March and are still favorable for herd expansion. The March Milk Production report indicated a small year-over-year decline in February cow numbers, and first-quarter cow numbers are lowered from March’s forecast.


The report also indicated continued year-over-year declines in output per cow in the Upper Midwest. This reduction was countered by year-over-year increases in the West.


In light of improved producer returns, however, a herd expansion is expected later this year, and cow numbers are raised slightly from March for the second half of 2014. On balance, cow numbers for 2014 are unchanged from February’s forecast at 9.255 million head. Milk production is increased from March projections to 206.1 billion lbs.


The increased production is based on higher output per cow, which is forecast at 22,280 lbs., with the improvement coming in the second and third quarters of 2014. The yield improvement is predicated on higher forage quality relative to 2013 and improved producer returns that will encourage feeding higher quality rations.


Fats basis imports are unchanged from last month at 3.7 billion lbs.; imports on a skims-solids basis are lowered fractionally to 5.2 billion lbs. from March based on lower year-to-date imports of milk protein concentrates and casein.


Fats basis exports are raised this month to 12.7 billion lbs. from March forecasts. Strong first-quarter export movement of cheese to Mexico, Japan and South Korea, combined with strong butter demand from North Africa and the Middle East, is the basis of the forecast rise. Skims-solids basis exports were lowered slightly this month to 37.7 billion lbs. A downward trend in skim-milk powder exports offsets rises in cheese and whole milk powder exports. Later this year, U.S. exports will likely encounter stiffer foreign competition.


Commercial ending stocks for 2014 are reduced from last month to 10.9 billion lbs. on a fats basis and to 11.7 billion lbs. on a skims-solids basis. Strong domestic demand supplements export demand to tighten inventories and supports the product prices.


Price forecasts for cheese, butter and whey are raised from March forecasts. Price strength is a result of strong demand, both foreign and domestic. The cheese price is forecast at $1.985-$2.035/lb. Butter is projected at $1.760-$1.840/lb. Whey prices are increased this month to 61.5¢-64.5¢/lb.


Nonfat dry milk (NDM) prices are essentially unchanged from March forecasts at $1.830-$1.870/lb., although the price range is narrowed as U.S. product encounters competition from other exporting countries.


Milk price forecasts are raised this month as well, but will weaken as the year progresses (see table). The Class III price is increased to $20.40-$20.90/cwt., and the Class IV price is boosted to $21.05-$21.65/cwt. The all milk price is now forecast at $22.55-$23.05/cwt.


The Class III and Class IV quarterly projections are compared with CME closing prices for April 15. USDA projections were made prior to the most recent downturn in milk futures prices.

 

1/ USDA prices and forecasts from Livestock, Dairy & Poultry report (www.ers.usda.gov), issued April 15, 2014.
2/ Simple average of Chicago Mercantile Exchange futures prices at close of trading on April 15, 2014.
* Average may include actual federal milk marketing order Class III and Class IV prices for affected months.

Source: Dairy Herd Management


Posted on Thursday, April 17, 2014 (Archive on Thursday, April 24, 2014)
Posted by bholcomb@adpi.org  Contributed by bholcomb@adpi.org
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