Demand both at home and abroad is expected to support prices for all dairy products.
U.S. milk production next year is forecast to reach an all-time high of 205.3 billion pounds, based on today’s World Agricultural Supply and Demand Estimates (WASDE) report from USDA.
2014’s increased milk output will occur as expected stronger milk prices and lower feed costs support a more rapid increase in cow numbers and output per cow, USDA noted.
U.S. dairy exports are also projected to remain strong next year.
Despite higher dairy production, 2014’s demand strength in importing countries and improving domestic demand in the U.S. are expected to support prices for all products, the WASDE report said. Milk prices are expected in the range of $17 to $20 per cwt.
USDA estimated the 2014 Class III price at $17.05-$17.85 per cwt. on higher cheese and whey prices. The Class IV price is projected at $19.00-$19-90 per cwt. on higher butter and nonfat dry milk (NDM) prices. The 2014 All-Milk price is expected to reach $19.70-$20.50 per cwt.
For 2013, USDA reduced its forecast for the cheese price, reflecting current prices. However, strength in current prices for butter, NDM, and whey resulted in higher price forecasts for those products. The 2013 Class III milk price is unchanged at $17.90 - $18.00 per cwt. as lower forecast cheese prices offset higher whey prices. USDA pegged 2013 Class IV prices some 15¢ per cwt. higher over its November estimate, at $18.95 - $19.15 per cwt. USDA also forecast this year’s All-Milk price at $19.90 - $20.00 per cwt. -- the highest since 2011.
USDA reduced the 2013 milk production forecast by 100,000 pounds from last month, to 201.6 billion pounds, based on recent estimates of cow numbers. That output is still a record high for the U.S.
Fat basis imports are reduced for 2013 but are unchanged for 2014. On a skims-solids basis, imports are raised in 2013 but unchanged for 2014. Exports are raised on a fats basis based on the strength of butterfat shipments to non-traditional markets. On a skims-solids basis, higher NDM and whey exports are offset by lower lactose exports leading to a lower forecast for 2013, but for 2014, expected strength in NDM results in a higher skim-solids forecast.