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USDA forecasts more milk but slightly better prices too

Progressive Dairy Editor Dave Natzke Published on 10 October 2019

The USDA’s latest outlook report raised milk production forecasts for both 2019 and 2020 but also projects slightly higher prices for most categories of milk. Higher corn and soybean prices are also forecast.

Compared to a month ago, the USDA’s October World Ag Supply and Demand Estimates (WASDE) report forecasts dairy cow numbers to increase through the end of this year, with higher milk output per cow increasing total production in both years.

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The 2019 milk production forecast was raised by 200 million pounds compared to last month’s projections to 218.2 billion pounds. If realized, 2019 production would be up less than 0.3% from 2018.

The 2019 all-milk price was forecast at $18.40 per hundredweight (cwt), up 5 cents from last month and up $2.14 per cwt from 2018; it would be the highest annual average since the record high of $23.97 per cwt set in 2014. The projected Class III price was raised 10 cents to $16.55 per cwt, with higher cheese prices offsetting weaker prices for whey. The projected Class IV price was raised a nickel to $16.20 per cwt, with higher nonfat dry milk prices offsetting a decline in butter prices.

In part due to an extra day in a leap year, the 2020 milk production forecast was raised 400 million pounds compared to last month to 221.6 billion pounds. If realized, 2020 milk production will rise about 1.5% from 2019.

For 2020, cheese and nonfat dry milk price projections were raised from the previous month, but the price forecast for butter was reduced, and whey was unchanged. As a result, the Class III price forecast was raised 15 cents to $17.20 per cwt, but the Class IV price was lowered a nickel to $16.10 per cwt. That translates into a 2020 all-milk price average of $18.85 per cwt, unchanged from last month’s forecast.

Beef outlook

The forecast for 2019 beef production was reduced from the previous month based on a slower-than-expected pace of fed cattle slaughter. For 2020, the beef production forecast was unchanged for the year, although a slower pace of placements in the third quarter of 2019 is expected to result in lower first-quarter beef production but higher second-quarter production.

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The cattle price forecast for 2019 was raised based on current prices, with that strength carrying over into 2020. The 2019 average cattle price was projected at $115.50 per cwt, up $1.50 from last month’s forecast; the 2020 forecast was raised $1 to $116 per cwt.

Crop production, price estimates updated

Along with the WASDE report, the USDA also released its October Crop Production report on Oct. 10, updating previous acreage and production estimates.

  • Corn: This month’s WASDE 2019-20 U.S. corn outlook estimated lower beginning stocks, slightly lower production, reduced exports and corn used for ethanol, greater feed and residual use and lower ending stocks.

The projected 2019-20 season-average corn price received by producers is $3.80 per bushel, up 20 cents from both last month’s forecast and the 2018-19 average price.

2019 corn production was forecast at 13.8 billion bushels, with a decline in acreage offset by higher expected yields. Corn acreage harvested for grain was forecast at 81.8 million acres, down less than 1% from the previous forecast but up slightly from 2018. As of Oct. 1, the forecast yield, at 168.4 bushels per acre, was up 0.2 bushel from the previous forecast, even though the combined objective yield data for the 10 leading corn-producing states indicated the lowest number of ears per acre since 2012.

  • Soybeans: Soybean supplies for 2019-20 were forecast lower due to lower production and beginning stocks. The 2019-20 soybean price received by producers was forecast at $9 per bushel, up 50 cents from last month and 52 cents more than the 2018-19 average. Soybean meal prices are projected at $325 per ton, up $20 from last month’s forecast and nearly $17 more than 2018-19.

Soybean production was forecast at 3.6 billion bushels, down 83 million bushels from last month’s forecast, mainly on lower yields. The soybean yield is projected at 46.9 bushels per acre, down 1 bushel from the September forecast. The objective yield data (as of Oct. 1) for the combined 11 major soybean-producing states indicate a lower pod count compared to the previous year. A decrease of more than 400 pods per 18 square feet from 2018's final pod count is forecast in Illinois, Indiana, Iowa, Ohio and South Dakota. Soybean harvested area was forecast at 75.6 million acres, down less than 1% from the previous forecast but down 14% from 2018.

  • Dry hay: Production of alfalfa and alfalfa-mixture dry hay for 2019 was forecast at 54.2 million tons, down 2% from the previous forecast but up 3% from 2018. Based on Oct. 1 conditions, yields are expected to average 3.22 tons per acre, up 0.05 ton from last year. Harvested area is forecast at 16.8 million acres, unchanged from the previous forecast, but up 1% from 2018. Record-high yields are expected in Nevada and New Mexico.

Production of other hay was forecast at 76.7 million tons, up 1% from the previous forecast and up 8% from 2018. Based on Oct. 1 conditions, the U.S. yield is expected to average 2.13 tons per acre, up 0.17 ton from last year. If realized, this would represent a new record high, surpassing the previous record of 2.09 tons per acre in 2016. Harvested area is forecast at 35.9 million acres, unchanged from the previous forecast but down 1% from 2018. Favorable conditions in Iowa, Missouri and Tennessee have producers expecting record-high yields in 2019.

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  • Cottonseed: The USDA forecast the 2019 cottonseed harvest at 6.725 million tons, down about 50,000 tons from last month’s forecast. Despite the downward adjustment, it would still be up about 1.1 million tons from last year and the highest total since 2006.  end mark
Dave Natzke
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