Outlook improves for U.S. dairymen

Carol Ryan Dumas
USDA's Economic Research Service raised its forecasted 2014 dairy cow numbers, milk yields and milk production, stating an improved profit outlook for producers will lead to slightly more production. The forecast is based on lower feed costs and continuing firm milk prices.

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



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