Reduced milk outlook boosts price projections a little
Citing declining milk cow numbers and slower growth in milk per cow, the USDA trimmed its 2018 milk production estimate and also cut the 2019 production forecast, lending support for somewhat higher prices.
According to the latest World Ag Supply and Demand Estimates (WASDE) report, the 2018 milk production estimate now stands at 217.6 billion pounds. That would be up less than 1 percent from 2017’s production total of 215.5 billion pounds.
The USDA’s estimates for 2018 price averages were: Class III – $14.61 per hundredweight (cwt), down $1.56 from the average in 2017 and 26 cents less than 2016; Class IV – $14.23 per cwt, down 93 cents from 2017 but 46 cents more than 2016; and all-milk – $16.20 per cwt, $1.45 less than last year’s average of $17.65 per cwt and slightly below the 2016 average of $16.30 per cwt.
For 2019, the USDA cut its milk production forecast to 220.1 billion pounds. If realized, it would be up about 1.1 percent from the 2018 estimate.
In its price projections for 2019, the USDA forecast averages will improve from 2018, although not dramatically. Most of the gain will come in Class IV, thanks to higher nonfat dry milk and butter prices, which offset further weakening in cheese prices. Projected prices are (midpoint of range): Class III – $15.05 per cwt; Class IV – $15.95 per cwt; and all-milk – $17.25 per cwt.
Beef, feed outlooks
The 2019 beef production forecast was reduced on lower projected slaughter, as smaller anticipated feedlot placements in late 2018 and early 2019 were expected to result in lower fed cattle marketings and slaughter in the first half of the year. First-quarter 2019 projected fed cattle prices were raised slightly, but are expected to decline through the rest of the year.
Looking at the WASDE report’s feed situation and forecast:
- Corn: This month’s 2018-19 U.S. corn outlook lowered almost all numbers, including production, ending stocks, imports, uses for feed, food and industrial uses. The projected 2018-19 season-average corn price received by producers narrowed to a range of $3.35 to $3.85 per bushel or $3.60 per bushel at the midpoint. That would be up from $3.36 per bushel in 2017-18.
- Soybeans: The report reduced previous harvest estimates. Lower supplies and increased crush were partly offset with a 25-million-bushel reduction in exports. Ending stocks are projected at 910 million bushels, down 45 million from the previous forecast. Projected 2018-19 marketing-year average prices paid to growers were raised slightly. The soybean price was forecast in a range of $8.10 to $9.10 per bushel, yielding an average of $8.60 per bushel, which is below the $9.33 per bushel average in 2017-18. The soybean meal price forecast, in a range of $295 to $335 per ton, yields a midpoint of $315 per ton. That’s down from $345 per ton in 2017-18.
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Dave Natzke
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