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USDA Livestock Dairy outlook

Corn prices are unchanged from February, but the price range was narrowed in this month’s World Agricultural Supply and Demand Estimates report to $4.25-$4.75 per bushel despite slightly higher projected corn exports. Soybean meal prices are increased to $450-$490 per ton this month as a reduced soybean meal crush lowered projected meal production. The preliminary February alfalfa price is reported in the February Agricultural Prices at $188 per ton, up from January but well below a year ago. These projected feed prices will likely have little impact on the strongly expansionary milk-feed price ratio, reported at 2.55 in the Agricultural Prices report. Much of the strong milk-feed price ratio can be attributed to record high milk prices. However, cow numbers are unchanged from February’s forecast at 9.3 million head. Dairy cow culling remains strong, but prices for replacement heifers and dairy calves are higher than last year, suggesting that herd expansion could be in the offing. Last month’s forecast of an expansion beginning during in 2014 is= held over this month.

Milk per cow is also unchanged from the February forecast of 22,230 pounds per cow. Growth in output per cow was below the 5-year average in January. It is likely that the colder than normal winter in the upper Midwest, combined with the apparent variable forage quality of last year’s hay crop, contributed to lower than expected output per cow. In contrast and despite drought conditions, milk per cow increased in California and underpinned January’s nearly 5-percent year-over-year rise in milk output in that State. A return to more normal forage quality this spring in most of the United States will likely boost milk per cow in the second quarter. The milk production forecast is unchanged from February at 205.7 billion pounds for the year.

Commercial milk equivalent exports are raised this month to 12.4 billion pounds on a fats basis based on strong year-to-date movement of cheese to Mexico and South Korea. In addition, butter exports to North Africa and Middle East countries are stronger than earlier forecast, helping lift export forecasts. Exports on a skimssolids basis are unchanged from last month’s forecast at 38.2 billion pounds as increased lactose and cheese sales are offset by slightly lowered forecasts of skim milk powder and whey exports. Imports on both a fats and skims-solids basis are unchanged from February to 3.7 billion and 5.3 billion pounds, respectively. Ending stocks on a fats basis are lowered on stronger foreign and domestic demand for cheese and butter. Ending stocks on a skims-solids basis are reduced slightly this month from February.

Dairy product prices, and consequently milk prices, are expected to remain high for the remainder of 2014. Strong demand, both foreign and domestic, will support record and near-record prices despite increased competitor supplies. The March cheese price forecast is substantially higher than February projections at $1.860- $1.920 per pound. Similarly, butter prices are raised to $1.605-$1.695 per pound in this month’s forecast. Nonfat dry milk price forecasts are also sharply higher than February at $1.825-$1.875 per pound. The whey price forecast is also raised, but not as dramatically, to 58.0-61.0 cents per pound. Higher prices for dairy products result in higher class and all milk prices. The Class IV price is forecast at $20.35- $21.05 per cwt and is higher than the forecast Class III price of $18.95-$19.55 per cwt. The all milk price forecast is increased to $21.40-22.00 per cwt for March

Source: USDA


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