Lower feed costs in 2014 are improving the profit outlook for dairy producers, according to the December Livestock, Poultry and Dairy outlook by USDA’s Economic Research Service.
ERS forecasts the 2013/14 corn season average price at $4.05 a bushel to $4.75 a bushel – down from the average of $6.90 in 2012/13, according to the Livestock Marketing Information Center.
The preliminary November alfalfa price slipped to $188 a ton, well below last year’s November price of $215 per ton, according to ERS.
“On balance, dairy producers will likely face even lower feed prices next year compared with 2013,” ERS reported.
The economists slightly increased last month’s forecast of the 2014 dairy herd from 9.245 million cows to 9.250 million cows, and the yield per cow from 22,170 pounds to 22,190 pounds. Milk production in 2014 was raised from 204.9 billion pounds to 205.3 billion pounds.
“It is likely the 2013 herd reduction has reached its nadir,” they stated.
U.S. dairy cow numbers have declined 44,000 head since July, according to USDA-NASS statistics.
The slightly higher projections are based on an improved profit outlook as a result of continued firm milk prices and declining feed costs, they reported.
Strong exports and lowered commercial ending stocks for 2013 of cheese, butter and nonfat dry milk should keep dairy product and milk prices in healthy ranges.
Cheese and skim milk powder/nonfat dry milk exports are expected to be stronger in 2014 than in 2013, and strong demand for cheese and butter could tighten stocks early in the year. Increased milk production and prices that favor butter/powder production, however, could boost butter stocks later in the year, ERS reported.
Forecasted average dairy product prices
Product 2013 2014
Dollars per pound
Cheese 1.765 1.730
Butter 1.545 1.555
NDM 1.705 1.745
Whey 0.59 0.565
Forecasted average milk prices
Milk 2013 2014
Dollars per hundredweight
Class III 17.95 17.45
Class IV 19.05 19.45
All-milk 19.95 20.10
Source: USDA Economic Research Service