WASDE: 2015 Milk Output Estimate Raised; 2014 Lowered

July 11, 2014 — USDA’s World Agricultural Supply and Demand Estimates (WASDE) report, released July 11, lowered the milk production forecast for 2014 from last month as slower growth in output per cow more than offsets a more rapid expansion in cow numbers. The forecast for 2015 is raised as higher milk prices and lower feed costs are expected to support more rapid growth in cow numbers and output per cow.

Export forecasts for 2014 are lowered on a fat basis but raised on a skim-solids basis. High domestic butter prices are expected to limit export opportunities, but nonfat dry milk/skim milk powder (NDM/SMP) exports are expected to remain strong. For 2015, no change is forecast to fat-basis exports, but strength in NDM/SMP sales will help support higher skim-solids exports.

Product prices are forecast higher for 2014 with strength in butter prices expected to carry into 2015. Despite increased production, robust domestic demand and stronger NDM/SMP exports will support prices.    Class III and Class IV prices for 2014 are raised on stronger component product prices and the Class IV price forecast for 2015 is raised reflecting strength in butter prices. The all milk price is forecast at $23.25 to $23.55 per cwt for 2014, and $19.75 to $20.75 per cwt for 2015.

• 2014 production and marketings were projected at 205.9 billion lbs. and 204.9 billion lbs., respectively. Both are down 200 million lbs. from last month’s projections. If realized, 2014 production and marketings would be up 2.3% from 2013.

• 2015 production and marketings were projected at 212.4 billion lbs. and 211.4 billion lbs., respectively. Both are up 300 million lbs. from a month ago. If realized, 2015 production and marketings would be up about 3.2% from 2014.     Fat-basis exports are forecast lower on increased competition from traditional exporters, primarily in butterfat markets. Continued strength in nonfat dry milk (NDM) will help limit declines in skim-solids exports. Fat-basis import forecasts are expected to be about the same as 2014 but skim-solids imports will be lower. With higher domestic production, cheese, butter, NDM, and whey prices are forecast lower. Both Class III and Class IV prices are forecast lower. The all milk price is forecast at $19.70 to $20.70 per cwt for 2015.

Fat basis imports are forecast lower while skimsolids imports are higher. Exports are raised on stronger sales of NDM, butterfat and cheese. Butter and whey prices are raised from last month while NDM is lower. Cheese is unchanged but the range is

narrowed. The Class III price is raised on higher whey prices. Class IV is up as higher prices for butter more than offset reduced prices for NDM. The all milk price is forecast to average $22.70 to $23.00 per cwt.

 

Dairy price forecasts 

Estimated Forecast

Product 2013 2014 2015    

Class III ($/cwt) 17.99 21.00-21.30 16.95-17.95

Class IV ($/cwt) 19.05 21.95-22.35 18.70-19.80

All milk ($/cwt) 20.05 23.25-23.55 19.75-20.75

Cheese ($/lb.) 1.7683 2.0300-2.0600 1.6700-1.7700

Butter ($/lb.) 1.5451 1.9650-2.0250 1.6500-1.7800

NFDM ($/lb.) 1.7066 1.8350-1.8650 1.6050-1.6750

Dry whey (¢/lb.) 0.5902 0.6350-0.6550 0.5500-0.5800

WASDE Crop Update    Projected 2014/15 U.S. feed grain supplies in today’s World Agricultural Supply and Demand Estimates report (WASDE) are raised with increases for corn and sorghum beginning stocks and higher expected sorghum production. Corn production is projected 75 million bushels lower based on harvested acres from the June 30 Acreage report. The national average corn yield remains projected at a record 165.3 bushels per acre.       Favorable early July crop conditions and weather support an outlook for record yields across most of the Corn Belt, however, for much of the crop, the critical pollination period will be during middle and late July. At the projected 13,860 million bushels, this year’s crop remains just 65 million bushels below last year’s record.

Corn use changes for 2014/15 are limited to a 50-million-bushel reduction in expected feed and residual use based on the lower production projection and higher projected sorghum feed and residual use. Sorghum food, seed, and industrial use, exports, and ending stocks are also raised for 2014/15 with sorghum production projected up 50 million bushels on the higher area reported in the Acreage report. Corn ending stocks are projected up 75 million bushels with a higher carryin and lower feed and residual use more than offsetting the small acreage-driven decline in production. The projected range for the season-average corn price is lowered 20 cents on each end to $3.65 to $4.35 per bushel.

Lower farm prices are also projected for sorghum, barley, and oats. A number of 2013/14 feed grain supply and use changes are made this month reflecting June 1 stocks estimates from the June 30 Grain Stocks and based on final marketing-year barley and oats trade data from the U.S. Census Bureau. Projected corn feed and residual use is lowered 125 million bushels based on lower-than-expected March-May disappearance as indicated by the June 1 stocks.

Corn used to produce ethanol is projected 25 million bushels higher based on the pace of ethanol production to date and lower projected sorghum food, seed, and industrial use, most of which is for ethanol.

Sorghum exports are projected up 10 million bushels reflecting continued steady export sales and the large 2013/14 outstanding sales balance. Projected 2013/14 farm prices for corn and sorghum are lowered this month as favorable weather for developing 2014 crops reduce summer price prospects.

Global coarse grain supplies for 2014/15 are projected 7.0 million tons higher with larger beginning stocks for the United States, Brazil, and China and larger production for China, the EU, Ukraine, Russia, and Serbia. Lower corn production for the United States and lower corn, barley, and oats production for Canada partly offset this month’s increases in world coarse grain output. World barley production is higher with larger crops expected in Ukraine and Russia.

Foreign corn production for 2014/15 is raised 1.7 million tons. China corn production is up 2.0 million tons on higher expected area. China 2013/14 corn production is also raised, up 0.8 million tons based on the latest government estimates that include higher area. EU 2014/15 corn production is raised 0.4 million with larger crops expected in Germany and France. Serbia corn production is also raised 0.3 million tons. Partly

offsetting is a 0.9-million-ton reduction in Canada corn reflecting the lower planted area recently reported by Statistics Canada. Brazil corn production is unchanged for 2014/15, but raised 2.0 million tons for 2013/14 based on higher area indications for second crop corn. Global 2014/15 corn trade is nearly unchanged with a reduction for Canada exports partly offset by an increase for Serbia. For 2013/14, world corn trade is raised with higher imports for the EU and South Korea more than offsetting a reduction for China. Corn exports for 2013/14 are raised for Canada, the EU, and Russia. Global corn consumption is lowered slightly for both 2013/14 and 2014/15 mostly reflecting the lower U.S. feed and residual use projections.

Global 2014/15 corn ending stocks are projected 5.4 million tons higher with increases for China, Brazil, and the United States more than offsetting the Canada reduction.

U.S. oilseed production for 2014/15 is projected at 113.1 million tons, up 5.0 million tons with higher soybean production accounting for most of the change. Soybean production is projected at a record 3,800 million bushels, up 165 million due to increased harvested area. Harvested area, forecast at 84.1 million acres in the June 30 Acreage report, is 3.6 million above the June forecast. The soybean yield is projected at 45.2 bushels per acre, unchanged from last month. Soybean supplies are 180 million bushels above last month’s forecast due to higher beginning stocks and production.

Soybean crush is projected at 1,755 million bushels, up 40 million reflecting increased domestic soybean meal disappearance in line with adjustments for 2013/14 and higher U.S. soybean meal exports that offset lower projected exports for India. Soybean exports for 2014/15 are raised 50 million bushels to 1,675 million reflecting record U.S. supplies and lower prices.

U.S. soybean ending stocks are projected at 415 million bushels, up 90 million. If realized, projected stocks would be the highest since 2006/07.

Prices for soybeans and products for 2014/15 are all reduced. The U.S. season-average soybean price is projected at $9.50 to $11.50 per bushel, down 25 cents on both ends of the range. Soybean meal prices are projected at $350 to $390 per short ton, down 5 dollars on both ends. The soybean oil price range is projected at 36 to 40 cents per pound, down 1 cent on both ends.

Global oilseed production for 2014/15 is projected at a record 521.9 million tons, up 5.8 million from last month with soybeans and rapeseed accounting for most of the change. Global soybean production is projected at 304.8 million tons, up 4.8 million mostly due to higher production in the United States. Higher soybean production is also projected for Russia and Ukraine, both reflecting higher harvested area. Lower soybean production for India resulting from reduced harvested area partly offsets these gains. Harvested area is reduced based on planting delays resulting from the slow development of the monsoon in the main soybean producing states.

Read the complete WASDE at: http://www.usda.gov.oce/commodity/wasde/latest.pdf.

Source:?USDA WASDE report, July 11, 2014

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