The Agriculture Department raised its milk production forecast for 2023 but left the 2024 estimate unchanged in the latest World Agriculture Supply and Demand Estimates report, based on “slightly more rapid growth in milk per cow.”
2023 production and marketings were estimated at 227.6 billion and 226.6 billion pounds, respectively, up 100 million pounds on both from a month ago. If realized, both would be up 1.1 billion pounds or 0.5% from 2022.
2024 production and marketings were projected at 230.4 billion and 229.4 billion pounds, respectively. Both are unchanged. If realized, 2024 production and marketings would be up 2.8 billion pounds or 1.2% from 2023.
The Class III milk price average was reduced, reflecting lowered cheese price forecasts. The 2023 average was put at $17.05 per hundredweight, down 30 cents from a month ago, and compares to $21.96 in 2022 and $17.08 in 2021. The 2024 average was projected at $17.20, down 35 cents from last month’s estimate.
The Class IV price average was raised on stronger butter and NDM prices. It was projected at $19.25 for 2023, up 65 cents from last month’s estimate, and compares to $24.47 in 2022 and $16.09 in 2021. The 2024 average is expected to hit $18.80, up 80 cents from last month’s estimate.
Corn, soybean outlook
U.S. corn production was forecast at 15.1 billion bushels, down 70 million bushels, or less than 1% from the previous forecast but up 10% from 2022. Yields are expected to average 173.0 bushels per acre, down 0.8 bushel from the previous forecast and down 0.4 bushel from last year. Area harvested was forecast at 87.1 million acres, unchanged from the previous forecast but up 10% from last year. Exports were reduced 25 million bushels and feed and residual use is down 25 million bushels. Ending stocks were lowered 110 million bushels and the season-average corn price was raised a nickel to $4.95 per bushel.
Soybean production was forecast at 4.10 billion bushels, down 1% from last month’s estimate and down 4% from 2022. Yields are expected to average 49.6 bushels per acre, down 0.5 bushel from the previous forecast but equal to 2022. Area harvested was forecast at 82.8 million acres, unchanged from a month ago but down 4% from 2022. The season-average price was unchanged at $12.90 per bushel. Soybean meal and oil prices were unchanged at $380 per short ton and 63 cents per pound, respectively.
Butter melts
CME Cheddar block cheese closed Friday the 13th at $1.70 per pound, down a quarter-cent on the week, sixth week in a row of decline, and 35 cents below a year ago.
The barrels finished at $1.6450, up 6.75 cents on the week but 48 cents below a year ago, and 5.50 cents below the blocks. The week saw just 2 loads of block and 3 of barrel find new homes.
Monday’s trading saw the blocks hold steady, then increase a quarter-cent Tuesday, hitting $1.7025 per pound, on 6 trades, as traders anticipate the September Milk Production report Thursday.
The barrels inched a quarter-cent lower Monday on 5 trades but got it back Tuesday on a trade, returning to Friday’s close.
StoneX says, “Cheese demand is stable but also rather quiet for the season. Few buyers are worried or have to stretch to get something bought at the exchange, especially with anecdotal reports of some loads transacting in the $1.60s.”
Midwest cheesemakers reported similar prices on the spot milk market to previous weeks, according to Dairy Market News, and at mid-week were at or near $1 above Class III. Milk offers were still somewhat quiet despite growing farm milk production and component levels. Milk is not as available as it was earlier in the year or at this time last year, when prices ranged $1 under to 25 cents over Class. Cheese demand is healthy in the Midwest.
Domestic cheese demand for retail and food service is steady in the West. Reports are that domestic demand was stronger compared to export demand over the first three quarters of 2023. “Although some stakeholders express sentiments that domestic prices are currently more competitive to attract international purchasers, domestic demand has started out stronger than export demand during fourth quarter,” says DMN.
Cash butter, after five consecutive weeks of gain and achieving an all-time high of $3.5025 per pound on Oct. 6, began its expected descent last week, closing Friday at $3.36, down 14.25 cents on the week but still 18.50 cents above a year ago. There were 8 loads that exchanged hands last week.
The first trade Monday was at $3.30 per pound but the sales kept coming with the fifth at $3.35, down a penny on the day. Surprise, surprise, Tuesday saw a rebound of 6 cents, pushing the price back to $3.41, with 3 trades doing the lifting.
The day-to-day butter plant dynamic is generally unchanged despite prices at record highs, says DMN. Cream remains somewhat snug but cream offers were reportedly growing toward the middle of the week and for weekend shipments. Near-term butter demand is still somewhat steady. There is concern that orders will soon slow, not solely because of the price, but because holiday pipelines are closer to being filled. Buyers do not want to get caught holding inventories at $3.50 per pound.
Western cream availability remains a little more available throughout the region and comparatively more available in the northern parts of the region, says DMN. Some butter manufacturers indicate additional cream purchases are being limited given current prices. Butter production is mixed among those with currently active churns.
Grade A nonfat dry milk finished Friday at $1.22 per pound, up 4 cents on the week but still 27 cents below a year ago. There were 14 sales on the week.
The powder was unchanged Monday but was up a penny Tuesday to $1.23 on 10 trades, highest CME price since Feb. 13.
Dry whey closed Friday at 33.50 cents per pound, 3.75 cents higher on the week, giving a lift to Class III futures, however, was still 10.75 cents below a year ago. There were 70 sales reported last week at the CME, the most since the week of May 15.
Monday’s whey was unchanged, then jumped 3.50 cents Tuesday, to 37 cents per pound on 7 trades and 25 unfilled bids, highest since April 19.
GDT up 4.3%
The Global Dairy Trade saw its fourth consecutive rise Tuesday. Event 342 saw the weighted average rise 4.3%, following a 4.4% gain on Oct. 3. Traders brought 79.3 million pounds of product to the market, down from 84.5 million on Oct. 3, the lowest since Aug. 15. The average metric ton price climbed to $3,202 U.S., up from $3,104 on Oct. 19, and the highest since July 18.
Anhydrous milkfat led the gains, up 7.1%, following a 3.7% rise on Oct. 3. Butter was up 2.9%, after a 1.3% rise. Skim milk powder, after leading the gains the last two events, was up 4.3%, following a 6.6% surge. Whole milk powder was up 4.2%, after jumping 4.8%. Lactose and GDT Cheddar were both up 0.2%, following respective 1.3% and 4.8% declines last time.
StoneX says the GDT 80% butterfat butter price equates to $2.1863 per pound U.S., up 6 cents from the Oct. 3 event, and compares to CME butter which closed Tuesday at a world high $3.41. GDT Cheddar, at $1.7499, was up fractionally and compares to Tuesday’s CME block Cheddar at $1.7025. GDT skim milk powder averaged $1.2062 per pound, up from $1.1604 (4.6 cents), and whole milk powder averaged $1.3877 per pound, up from $1.3296 (5.8 cents). CME Grade A nonfat dry milk closed Tuesday at $1.23 per pound.
