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USDA boosts milk production forecast for 2020; projected feed costs lower

Progressive Dairy Editor Dave Natzke Published on 12 August 2020

The USDA’s August World Ag Supply and Demand Estimates (WASDE) report raised the milk production forecast for 2020, while scaling back the large jump in milk prices projected last month. However, the feed outlook should also translate into lower costs.

Milk production for 2020 was forecast at 221.8 billion pounds, up 300 million pounds from last month’s estimate, as higher expected growth in milk per cow more than offsets slightly lower dairy cow numbers. If realized, it would be up about 1.5% from 2019’s total of 218.4 billion pounds.

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The 2020 Class III milk price was projected at $17.40 per hundredweight (cwt), a 60-cent decline from last month’s forecast. With the 2020 projected Class IV milk price lowered 40 cents to $13.55 per cwt, the 2020 all-milk price is now projected at $17.95 per cwt, down 30 cents from last month.

The USDA price outlook is slightly lower than current Class III and Class IV futures prices for 2020. Using preliminary Chicago Mercantile Exchange (CME) futures prices on Aug. 12, the 2020 Class III price would average about $17.23 per cwt, while the Class IV price would average about $13.73 per cwt.

The 2021 the milk production forecast was reduced 300 million pounds from last month’s estimate to 225.3 billion pounds based on slower growth in cow numbers. If realized, it would be up about 1.6% from 2020’s estimate.

Despite the outlook for less milk, the USDA cut its 2021 price projections slightly. The 2021 all-milk price is forecast at $17.05 per cwt, unchanged from last month, but the Class III price was projected a dime lower to $16.10 per cwt, and the Class IV price was reduced 15 cents to $13.65 per cwt.

Beef outlook

The 2020 beef production forecast was raised from last month, reflecting a faster pace of steer and heifer slaughter. The 2021 beef production forecast was reduced from last month, as lower expected placements in the first half of the year will be reflected in lower forecast slaughter in the second half of 2021. Projected fed cattle prices were raised through the first quarter of 2021. The 2020 average price is now about $107 per cwt, with the 2021 annual average at about $110 per cwt.

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Feed outlook

Feed cost projections incorporated supply and demand estimates from the WASDE report, as well production estimates in the August Crop Production report, also released on Aug. 12.

  • Corn: This month’s 2020-21 U.S. corn outlook is for larger supplies, greater feed and residual use, increased exports and higher ending stocks. The projected 2020-21 season-average corn price received by producers is $3.10 per bushel, down 25 cents from last month’s forecast and about 50 cents lower than averages during 2018-19 and 2019-20.

2020 corn production was forecast at 15.3 billion bushels, up 278 million from the July projection and up 12% from last year’s harvest. U.S. area harvested for grain is forecast at 84 million acres, up 3% from the previous year. The season’s first survey-based corn yield forecast is a record-high 181.8 bushels per acre, up 14.4 bushels (9%) from last year. Record-high yields are forecast for Georgia, Kentucky, Michigan, Minnesota, New York, South Carolina, South Dakota, Tennessee, Washington and Wisconsin.

  • Soybeans: This month’s U.S. soybean supply projections for 2020-21 include lower beginning stocks and higher production, crush, exports and ending stocks. With the higher ending stocks, the U.S. season-average soybean price received by producers for 2020-21 was estimated at $8.35 per bushel, down 15 cents from last month’s forecast and about 20 cents less than 2019-20. The projected soybean meal price was cut $10 from last month to $290 per ton, which would be also be $10 less than the 2019-20 average.

U.S. 2020 soybean production was forecast at 4.425 billion bushels, up 25% from 2019. Harvested area was forecast at 83 million acres, up 11% from 2019. Based on conditions as of Aug. 1, yields are expected to average a record-high 53.3 bushels per harvested acre, up 5.9 bushels from 2019.

  • Hay: Production of alfalfa and alfalfa-mixture dry hay for 2020 was forecast at 51.7 million tons, down 6% from 2019. Based on Aug. 1 conditions, yields are expected to average 3.16 tons per acre, down 0.12 ton from last year. Harvested area is forecast at 16.4 million acres, down 2% from 2019.

Production of other hay was forecast at 73.6 million tons, down 1% from 2019. The U.S. yield is expected to average 2.04 tons per acre, down 0.03 ton from last year. Harvested area is forecast at 36 million acres, up 1% from 2019. Record-high yields are expected in California and Idaho.

  • Cottonseed: With less acreage planted to cotton, the 2020 cottonseed crop was estimated at 5.53 million tons, down about 415,000 tons from 2019 and the smallest harvest since 2016.  end mark
Dave Natzke
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