Class IV prices for 2013 and 2014 are projected to surpass Class III estimates, largely on higher nonfat dry milk prices.
Along with the record corn crop expected this year, the U.S. also is projected to churn out its highest-ever milk production levels in both 2013 and 2014, based on today's World Agricultural Supply and Demand Estimates (WASDE) report from USDA’s National Agricultural Statistics Service.
Milk output for next year is estimated at 204.9 billion pounds, up 400 million pounds from September’s outlook and an increase of 3.2 billion pounds over 2013’s expected production. USDA said producers are expected to increase cow herds in response to improving returns. Growth in milk per cow is also expected to be higher than 2013 as moderating feed costs and improved forage availability support feeding higher quality rations.
U.S. corn growers remain on track for a record-high 14.0 billion-bushel production year, USDA also projected.
USDA lowered its 2013 milk production forecast from September, reflecting slower growth in third-quarter production. It pegged 2013 U.S. milk output at 201.7 billion pounds.
Import forecasts are reduced for both 2013 and 2014 on lower expected milk protein concentrate imports. USDA raised exports for both 2013 and 2014 on stronger sales of fat-containing products and nonfat/skim milk powders.
Price forecasts for cheese, butter, and nonfat dry milk (NDM) are forecast higher on strong domestic and international demand. However, the price of whey is forecast lower, reflecting current prices. For 2014, higher dairy production is expected to pressure cheese, butter and whey prices, but anticipated strength in exports supports a higher NDM price forecast, USDA said.
Pressured by lower whey prices, the Class III milk price is reduced for 2013 to a projected range of $17.90-$18.00 per cwt. For 2014, Class III is forecast lower at $16.85-$17.75 per cwt. on a reduced price forecast for both whey and cheese.
The Class IV price forecast is raised for both years, largely on higher NDM prices, although higher butter prices in 2013 also provide support for the higher forecast. USDA foresees Class IV prices at $18.80-$19.00 for 2013, and at $18.60-$19.60 for 2014.
The All-Milk price is forecast at $19.80 to $19.90 per cwt. for 2013 and $19.30 to $20.20 per cwt. for 2014.
NASS revised the acreage planted to corn this season to 95.3 million acres, down 2% from the previous estimate. Despite the decrease, however, its production estimate remained high due to high forecasted yields. This season’s yields are expected to average 160.4 bu. per acre, with corn growers in 18 states forecast to reach record yields this year.
The weather also remains good for harvest so far this year, allowing growers to harvest 73% of the corn crop by Nov. 3, which is 2 percentage points ahead of the 5-year average harvest rate.
NASS also reduced the planted area for soybeans to 76.5 million acres, down 1% from the previous forecast. Just as with corn, however, favorable weather conditions account for higher pod counts compared with the 2012 yield. Soybean yields are expected to average 43.0 bushels per acre, with the final production forecast at 3.26 billion bushels. If realized, this will be the third largest production year on record.
U.S. cotton growers are forecast to produce 13.1 million 480-pound bales this year. This forecast is an increase of 2% from the September report, but is down 24% from last year’s production. Cotton yield is expected to average 808 pounds per harvested acre, up 79 pounds from 2012.