Milk production for the current year was reduced fractionally in September from the August forecast to 201.8 billion pounds. 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 $4.40-$5.20 per bushel. Yield forecasts were raised for September, and the higher production offset lower projected carryin stocks. Forecast corn production is now a record 13.8 billion bushels. The 2013/14 forecast soybean meal price was increased in September for 2013/14 to $360-$400 per ton due to a lower yield forecast. The August Agricultural Prices report places the preliminary August price for alfalfa hay at $200 per ton, down slightly from last month and down fractionally from August 2012. On balance, feed prices are forecast to moderate next year and the milk-feed price ratio should climb in 2014, helping to boost milk production. 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 lowered 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. International dairy product prices remain seasonally strong, despite an expected good production year in New Zealand. European Union (EU) production is lagging and internal EU prices remain strong. Year-to-date butter exports are robust and, given the relatively competitive U.S. prices, should continue apace. While global dairy prices will likely moderate in 2014, the United States will maintain a competitive advantage in
world dairy markets. U.S. dairy exports will likely remain brisk to traditional markets, such as 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 carryin stocks from 2013.
Price forecasts for the major dairy products are raised in the September forecast. Demand, particularly foreign demand, remains firm, while a U.S. production rebound is not expected until 2014. Cheese prices are raised from August to $1.755-$1.775 per pound this year and are increased for 2014 to $1.670-$1.770 per pound. Butter prices are raised slightly for 2013 to $1.500-$1.540 per pound and increased for next year to $1.470-$1.600 per pound. Stronger demand across the board tightens stocks; however, higher expected production next year lowers prices on a year-over-year basis for cheese and butter. Nonfat dry milk price forecasts for 2013 are raised in September to $1.675-$1.695 per pound and to $1.675-$1.745 per pound next year. Whey prices are unchanged from August at 58.5-60.5 cents per pound for the current year, increased slightly in 2014 to 58.5-61.5 cents per pound. Milk prices are increased to reflect the higher product prices. The Class III price is forecast higher than August 2013 at $17.90-$18.10 per cwt and forecast at $17.05- $18.05 per cwt in 2014. The Class IV price for 2013 is projected higher this month at $18.60-$18.90 per cwt and is also raised to $18.45-$19.55 per cwt for next year. Similarly, the all milk price is raised this month to $19.70-$19.90 per cwt and to $19.35-$20.35 per cwt for 2013 and 2014, respectively.