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USDA 2021 milk price outlook improves

Progressive Dairy Editor Dave Natzke Published on 12 January 2021

The USDA raised milk production forecasts for both 2020 and 2021. While 2021 annual average Class III and all-milk prices are expected to dip below 2020 levels, the latest projections improved more than $1 per hundredweight (cwt) from last month’s forecast. For dairy producers, however, soybean meal and corn prices are expected to climb.

The dairy outlook, included in the January World Ag Supply and Demand Estimates (WASDE) report, forecasts milk production increases due to growing dairy cow inventories and stronger growth in milk per cow.

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Final milk production for 2020 was estimated at 222.9 billion pounds, up 200 million pounds from last month’s estimate. If realized, milk production would be up 2% from 2019’s total of 218.4 billion pounds.

Recalculating last year’s prices, the 2020 Class III price forecast was reduced 4 cents from last month’s forecast to $18.16 per cwt, while the Class IV forecast price was raised 4 cents to $13.49 per cwt. The projected 2020 all-milk price was raised a nickel from last month to $18.30 per cwt.

For 2021, the USDA raised the overall production forecast to 226.7 billion pounds, up 400 million pounds from last month’s estimate. If realized, it would be up about 1.7% from 2020’s estimate.

Citing stronger domestic demand, projected 2021 cheese, butter, nonfat dry milk and whey price forecasts were raised from last month. Supported by higher product prices, the outlook for 2021 milk prices improved from last month’s projections. The all-milk price was raised $1.05 to $17.65 per cwt, the Class III price was raised $1.30 to $16.90 per cwt, and the Class IV price was raised 50 cents to $14.10 per cwt.

Beef outlook

The 2020 beef production forecast was reduced on lower cattle slaughter. Lower expected placements in late 2020 will impact fed cattle supplies in mid-2021. In addition to lower cattle numbers, carcass weights are forecast lighter for 2021.

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The 2020 fed cattle price forecast was unchanged from last month at about $108.50 per cwt; the 2021 average price was forecast at $115.50 per cwt, up 50 cents from last month’s forecast.

The USDA will release its semiannual Cattle report on Jan. 29, providing estimates of heifers held for breeding and an insight into the number of feeder cattle available for placement during 2021.

Feed costs to rise

Feed cost projections incorporated supply and demand estimates from the WASDE report and the 2020 annual Crop Production report.

  • Corn: Final 2020 production was estimated at 14.2 billion bushels, up 4% from the 2019 estimate. Area harvested for grain was estimated at 82.5 million acres, up 1% from 2019, with the average yield at of 167.5 bushels per acre, up 4.5 bushels.

While the final corn production estimate was up from 2019, it’s down from previous USDA projections. Total corn use is expected to reach 14.575 billion bushels, and the outlook for lower production results in decreased ending stocks.

At $4.20 per bushel, the projected 2020-21 season-average corn price received by producers was raised 20 cents from last month’s forecast and would be about 64 cents more than 2019-20.

  • Soybeans: Final 2020 production totaled 4.135 billion bushels, up 16% from 2019. Harvested area was up 10% from 2019 to 82.3 million acres. The average yield per acre was estimated at 50.2 bushels, up 2.8 bushels from 2019.

Like corn, the soybean production estimate is up from 2019 but down from forecasts earlier this fall. With lower supplies and increased use, ending stocks are projected at 140 million bushels, down 35 million from the previous forecast.

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Read also: USDA lowers corn and soybean supplies in latest WASDE report

The U.S. season-average soybean price received by producers for 2020-21 was estimated at $11.15 per bushel, up 60 cents from last month’s forecast and about $2.58 more than the 2019-20 average. The projected soybean meal price was raised $20 from last month’s forecast to $390 per ton, which would be $90 more than the 2019-20 average.

  • Cottonseed: The U.S. 2020-21 cotton production estimate was lowered nearly 1 million bales to 15 million, led by a 500,000-bale decline in Texas. Production for cottonseed 2020, based on a three-year average lint-seed ratio, is expected to total 4.587 million tons, down 23% from 2019 and the smallest total since 2015.

  • Forages: The USDA reports provided an overview for hay and other forage production and inventory estimates for 2020.

All hay stored on U.S. farms as of Dec. 1, 2020, totaled 84 million tons, down 1% from a year earlier and the lowest hay inventory on Dec. 1 hay stocks since the drought of 2012. Among major dairy states, record-low hay inventories were reported for New York and Pennsylvania.

Production of alfalfa and alfalfa-mixture dry hay in 2020 was estimated at 53.1 million tons, down 3% from 2019. Harvested area, at 16.2 million acres, was 3% below 2019. Average yield was estimated at 3.27 tons per acre, down 0.01 ton from 2019. Record-high yields were estimated in California and Idaho. Record-low yield was estimated in Massachusetts.

Production in all other hay in 2020 totaled 73.7 million tons, down less than 1% from the 2019 total. Harvested area, at 36 million acres, was up 1% from 2019. Average yield was estimated at 2.05 tons per acre, down 0.02 ton from 2019. This is the fifth highest yield on record. Record-high yields were estimated in Alabama, Arizona, Georgia, Idaho, Nevada and Utah.

Seventeen states were included in a USDA forage estimation program, which measures annual production of forage crops. Converted to 13% moisture, total 2020 all haylage and greenchop production was estimated at 29.3 million tons, of which 18.7 million tons were from alfalfa and alfalfa mixtures. The 17-state total for all forage production was 82.3 million tons.

Corn silage production was estimated at 138 million tons for 2020, up 3% from the 2019 estimate. Area harvested for silage was estimated at 6.72 million acres, up 2% from 2019. The U.S. corn silage silage yield was estimated at 20.5 tons per acre, up 0.3 ton from 2019.

Sorghum silage production was estimated at 3.13 million tons, down 22% from 2019. Area harvested for silage was estimated at 239,000 acres, down 29% from the previous year. Silage yield averaged 13.1 tons per acre, up 1.2 ton per acre from 2019.

Looking ahead to next year, growers seeded 2.18 million acres of alfalfa and alfalfa mixtures during 2020, down 12% from 2019. About 1.77 million acres (80%) of new seeding was concentrated in 22 of the 24 “major” dairy states. New alfalfa seeding acreage in those states was down 180,000 compared to a year earlier. New alfalfa seeding has dropped by about a third in the past dozen years or so; new seeding routinely surpassed 3 million acres per year between 1997 and 2006.

Annual hay and forage statistical data will be published in the March 1, 2021, issue of Progressive Forage magazine.  end mark

Dave Natzke
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