October 12, 2012 — Two of the most important reports of the year were released by USDA on Thursday, providing dairy farmers with some mixed news as we head toward the end of the year and into 2013. DairyProfit Weekly’s Dave Natzke told DairyLine listeners:
USDA’s October Crop Production report is generally seen as one of the more accurate snapshots for the year’s harvest, and in it, USDA reduced its corn harvest forecast to about 10.7 billion bushels, down 13% from 2011, and the lowest production since 2006. Due to the drought, average corn yields will be the lowest since 1995.
The news is better for soybeans, where USDA raised its production forecast 9% from a month ago, to 2.9 billion bushels, and this year’s crop could be the third-largest on record, welcome news for dairy farmers needing protein-rich soybeans for their cows.
Estimated production of another major feed, alfalfa hay, was raised from last month, but will still be the smallest harvest since 1988. And, for those farmers who feed cottonseed, the estimated harvest was raised slightly.
So, What impact will all this have on prices? For the most part, the news for dairy farmers is better, although not much. Combined with global crop conditions, USDA forecasts dairy farmers will see a 1% reduction in corn prices and a 3% decline in soybean meal prices.
That impact carried over into USDA’s World Ag Supply & Demand Estimates report, where the news is somewhat better, too.
Anticipated 2012 milk production was reduced, but raised slightly for 2013. With dairy product demand improving, the price forecast for all products were raised, helping improve the outlook for milk prices later this year and into 2013.
While still below 2011 prices, the 2012 all-milk price is now forecast at about $18.55/cwt., with the 2013 outlook nearly a dollar higher, at about $19.50/cwt.
In dairy, we’ll take good news where ever we can find it, and slightly lower feed prices, with improved milk prices, are certainly good news.