WASDE: More milk in 2014, but prices higher, too

(Dairy Herd Network) – USDA’s World Ag Supply & Demand Estimates (WASDE) report, released Feb. 10, raised the 2014 milk production estimate slightly, based on expectation of higher cow numbers in the second half of the year. Milk per cow was unchanged from last month’s projections.

The WASDE cited USDA’s Cattle report, released Jan. 31, estimating dairy replacement heifers expected to calve during 2014 were up about 2% from a year ago, while the number of milk cows was fractionally below a year ago. Strong returns resulting from higher milk prices and moderate feed costs are expected to boost expansion later in the year.

2014 milk production were projected at 205.7 billion lbs., up 100 million lbs. from last month’s estimate. Projected marketings, however, were unchanged from a month ago, at 204.7 billion lbs. If realized, 2014 production and marketings would be up about 2.2% from 2013.

The report also lowered both 2013 milk production and marketings by 100 million lbs., to 201.2 billion lbs. and 200.2 billion lbs. respectively. Both are up just 0.4% from 2012.

Fat-basis exports for 2014 are raised on increased sales of butter and cheese. Skim-solids exports are lowered, mostly on reduced exports of lactose. Fat and skim-solid imports are unchanged.

Cheese ($1.815-$1.885/lb.), butter ($1.550-$1.650/lb.) and whey (56¢-59¢/lb.) product prices were projected higher for 2014, supported by strong demand and price strength to date. The nonfat dry milk (NDM) price ($1.785-$1.845) was forecast lower on expectations of competition from other exporters in second-half 2014.

The 2014 Class III price is projected higher, in a range of $18.35-$19.05/cwt., on higher cheese and whey prices. The 2013 Class average price was $17.99/cwt.

The 2014 Class IV price was projected lower, in a range of $19.80-$20.60/cwt., as lower NDM more than offsets higher butter prices. The 2013 ClassIV price was $19.05/cwt.

The 2014 all milk price is forecast at $20.85-21.55/cwt., compared to $20.01/cwt. in 2013.

Beef prices to remain strong

The 2014 forecast of total red meat and poultry production is lowered from last month, with higher beef production is more than offset by lower pork, broiler, and turkey production. For beef, relatively large cattle placements in the fourth quarter of 2013 are expected to carry through into the first half of 2014, which will result in higher slaughter in 2014. Cow slaughter is also expected to remain relatively strong during the first half of 2014 with favorable cull cow prices.

Affecting cull cow prices, February cattle price projections for 2014 were raised from January’s estimate. The 2014 forecast is in a range of $132-$140/cwt., up $2-$3 from last month’s forecast. Prices are expected to be the strongest in the first and second quarters of 2014. The 2013 steer price was estimated at $125.89/cwt.

Feed price projections rise slightly

USDA’s World Ag Supply & Demand Estimates report said U.S. feed grain ending stocks for 2013/14 are expected lower. U.S. corn ending stocks are projected 150 million bushels lower, due to an increase in exports. Expected U.S. corn use for ethanol was unchanged at 5 billion bushels in 2013-14, up from 4.65 billion bushels in 2012-13.

The season-average farm price for corn was raised 10¢ on both ends of the projected range, to $4.20 to $4.80 per bushel. Season-average farm prices for the other feed grains are also projected slightly higher.

U.S. soybean supplies are increased 5 million bushels to 3.46 billion, on higher projected imports, mainly from Canada. Soybean exports for 2013/14 are projected at 1.51 billion bushels, up 15 million from last month reflecting the record pace of shipments and sales through January.

The 2013/14 season-average soybean price range is projected at $11.95 to $13.45/bushel, up 20¢ on both ends of the range. The soybean meal price is projected at $425 to $465/ton, up $10 on both ends of the range.