USDA dairy outlook: November 2013

November 15, 2013 — As usual, USDA’s monthly Livestock, Dairy & Poultry Outlook report mirrored dairy projections contained in the latest  World Ag Supply & Demand Estimates (WASDE) report, released November 8. Feed prices are expected to moderate in 2014, easing profit pressure on producers and leading to a modest increase in herd size in 2014. Imports on both a fats and skims-solids basis are forecast lower this month than in September and exports are raised. Exports on both a fats and skims-solids basis will slip in 2014 compared with 2013 as foreign competition increases. Herd size projections were resumed this month, and the National Agricultural Statistics Service estimated the nation’s herd at 9.237 million head for the July-September quarter. The U.S. dairy herd is expected to average 9.225 million head in 2013 and increase to 9.245 million head in 2014 as producers respond to improved returns. The current-year milk yield per cow is forecast at 21,865 pounds. Milk per cow is forecast at 22,170 pounds next year, based on expectations that cheaper feed and abundant forages will support improved yields. Milk production this year is projected at 201.7 billion pounds, slightly lower than forecast in September. Production in 2014 is forecast at 204.9 billion pounds, based on slightly higher cow numbers next year and trend yield growth. The improved feed price outlook should lead to some herd expansion in 2014.

• 2013 production and marketings were projected at 201.7 billion lbs. and 200.7 billion lbs., respectively. If realized 2013 production and marketings would be up about 0.7% from 2012.

• 2014 production and marketings were projected at 204.9 billion lbs. and 203.9 billion lbs. respectively. If realized, 2014 production and marketings would be up about 1.6% from 2013.
There’ll be lots for dairy traders to think on next week. The preliminary estimate on October milk production is issued by USDA Tuesday afternoon. The Federal order Class I base milk price is announced on Wednesday, Livestock Slaughter report on Thursday, and October Cold Storage report on Friday.

Quarterly and annual milk prices and projections

Year             All milk                 Class III       Class IV

2009

12.83

11.36

10.89

2010

16.26

14.41

15.09

2011

20.14

18.37

19.04

2012

18.53

17.44

16.01

2013

  Q1

19.50

17.44

17.71

  Q2            19.57           18.04          18.62
  Q3            19.53           17.81          19.13
  Q4 20.70-21.00 18.40-18.70 19.95-20.35
Year 19.80-19.90 17.90-18.00 18.80-19.00

2014

  Q1 19.70-20.30 16.95-17.55 18.80-19.50
  Q2 19.20-20.10 17.05-17.95 18.45-19.45
Q3 19.20-20.20 16.95-17.95 18.85-19.95
Q4
Year* 19.30-20.20 16.85-17.75 18.60-19.60

 

A special article from the Livestock, Dairy, and Poultry Outlook was issued by USDA today that addresses the effect of the Trans-Pacific Partnership (TPP) on U.S. dairy Trade. The TPP is a plurilateral free trade agreement presently being negotiated among 12 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States.

The TPP is expected to address many important trade issues; among them is increasing market access to goods and services by reducing tariffs and other trade barriers. The agreement may have an impact on the U.S. dairy industry, which is transitioning from being domestically focused to filling an important role in global trade.

In general, the TPP may:

• Create new opportunities for U.S. dairy trade in growing markets, especially Malaysia and Vietnam, where dairy consumption has expanded rapidly due to increasing incomes.

• Facilitate trade with existing partners, including Canada and Japan, by removing barriers that limit imports.

• Increase access to the U.S. dairy market for TPP partners by reducing tariffs and/or establishing dairy tariff-rate quotas (TRQs), as has been done under past U.S. free trade agreements (FTAs).

To read the complete report, log on to: http://www.ers.usda.gov/publications/ldpm-livestock,-dairy,-and-poultry-outlook/ldpm233.aspx

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