USDA dairy outlook: Little change
As in last week’s World Ag Supply & Demand Estimates report, the Dec. 17 USDA Livestock, Dairy & Poultry Outlook for 2012 and 2013 milk production are unchanged from November. A contraction in herd size is
expected to continue in 2013, but the pace of contraction was moderated slightly.
Total milk production is projected at 199.7 billion lbs. in 2012, unchanged from last month’s projection. Milk production for 2013 remains forecast at 199.7 billion lbs., also unchanged from the November forecast.
The projected 2012 U.S. dairy herd is unchanged from last month, at 9.225 million cows. USDA predicts lower cow numbers for 2013, but raised the estimate slightly from last month, to 9.130 million cows.
Current-year yield per cow was unchanged this month at 21,640 lbs., climbing to 21,880 lbs. for 2013, also unchanged from November.
Fat-basis imports are forecast at 3.9 billion lbs. for 2012, based largely on higher butterfat imports. Skims solids-basis imports are projected at 5.8 billion lbs., unchanged from last month. For 2013, milk equivalent imports on both a fat- and skims solids-basis were unchanged this month from November at 3.8 billion and 5.4 billion lbs., respectively.
Current-year fat-basis exports were estimated 8.9 billion lbs. The pace of butterfat exports has slowed as U.S. prices are less competitive with world prices. Skims solids exports are projected at 33.8 billion lbs. for 2012.
Commercial ending stocks for 2012 on a fat basis were lowered in December, based on lower expected butter stocks. Current year stocks on a skims-solids basis were raised based on higher than expected October stocks of nonfat dry milk (NDM). Fats basis commercial ending stocks for 2013 were lowered slightly in December, reflecting lower butter beginning stocks. Commercial ending stocks in 2013 on a skims-solids basis were lowered from November.
Cheese and butter price forecasts for 2012 were reduced from November estimates, but NDM and whey were raised. The 2012 cheese price was lowered to $1.700-$1.710/lb., but was raised to $1.750-$1.830/lb. for 2013. The stronger 2013 prices are based on improved cheese demand in both domestic and foreign markets.
Butter price forecasts were lowered to $1.585-$1.615/lb. and to $1.595-$1.705/lb. for 2012 and 2013, respectively. Butter demand has been weak and stocks ample. Butter prices will likely improve in 2013 compared with current year prices. NDM prices are forecast at $1.320-$1.340/lb. in 2012 and $1.440-$1.500/lb. in 2013, both upward revisions from November. Whey prices are projected at 59.0-60.0¢/lb. this year, a boost from November, and raised to 60.0-63.0¢/lb. from last month for 2013. Strong demand both internationally and domestically for dry products is expected to support the higher prices.
The Class III price forecast was lowered this month from November to $17.40-$17.50/cwt. and raised for 2013 to $18.00-$18.80 /cwt. based on higher whey prices.
The Class IV price for 2012 was unchanged from last month at $15.95-$16.15/cwt. as lower butter prices were largely offset by higher NDM prices. The Class IV price was raised in 2013 from last month to $17.00-$17.90/cwt. The slightly better Class IV price outlook is due to higher forecast NDM prices next year.
While USDA 2013 Class III price forecasts are in line with current CME futures prices, the CME is more bullish than USDA on 2013 Class IV prices (see table).
The all milk price is unchanged from November at $18.50-$18.60/cwt. For 2013, the all milk price is unchanged, but the range is narrowed 5¢ on each end to $19.15-$19.95 per cwt.