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USDA raises 2019 price outlook but forecasts more milk in both 2019 and 2020

Progressive Dairy Editor Dave Natzke Published on 08 November 2019

The USDA’s November World Ag Supply and Demand Estimates (WASDE) report raised milk production estimates for both 2019 and 2020 and provided a brighter outlook for 2019 prices. Although an increase in cow numbers is expected to slow, stronger-than-expected growth in milk output per cow – despite widespread feed quality concerns – pushed the milk production expectations higher.

The 2019 milk production forecast was raised by 400 million pounds compared to last month’s projections to 218.6 billion pounds. If realized, 2019 production would be up about 0.45% from 2018.

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The 2019 all-milk price was forecast at $18.60 per hundredweight (cwt), up 20 cents from last month and up $2.34 per cwt from 2018. The projected Class III price was raised 45 cents to $17 per cwt, with higher cheese prices offsetting weaker prices for whey. The projected Class IV price was raised a dime to $16.30 per cwt, with higher nonfat dry milk prices offsetting a decline in butter prices.

The 2020 milk production forecast was raised 800 million pounds compared to last month’s projection to 222.4 billion pounds. If realized, 2020 milk production will rise about 2.6% from 2019.

For 2020, cheese and nonfat dry milk price projections were raised from the previous month, but the prices forecast for whey and butter were reduced. As a result, the Class III price forecast was raised 30 cents to $17.50 per cwt, but the Class IV price was lowered 15 cents to $15.95 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 raised from the previous month on higher expected slaughter of both fed and nonfed cattle. For 2020, the beef production forecast was lowered on a slower expected pace of gains in carcass weights. A slightly slower pace of feedlot marketings also contributes to the reduced production forecast.

The cattle price forecast for 2019 was raised slightly based on current prices, with that strength carrying over into the first quarter of 2020. The 2019 average cattle price was projected at $116 per cwt, up 50 cents from last month’s forecast; the 2020 forecast was unchanged at $116 per cwt.

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Crop production estimates updated

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

  • Corn: This month’s WASDE 2019-20 U.S. corn outlook is for lower production, reduced use and smaller ending stocks. The Crop Production report estimated a total harvest of 13.7 billion bushels, down 1% from the previous forecast and down 5% from last year. Based on conditions as of Nov. 1, yields are expected to average 167 bushels per harvested acre, down 1.4 bushels from the previous forecast and down 9.4 bushels from 2018. Area harvested for grain is forecast at 81.8 million acres, unchanged from the previous forecast but up slightly from 2018.

The projected 2019-20 season-average corn price received by producers is $3.85 per bushel, up 5 cents from both last month’s forecast and up 24 cents from the 2018-19 average price.

  • Soybeans: The U.S. soybean outlook called for slightly lower production, reduced crush and higher ending stocks. The USDA’s Crop Production report forecast soybean harvest acreage at 75.6 million acres, unchanged from the previous forecast but down 14% from 2018. Yields are expected to average 46.9 bushels per acre, unchanged from the previous forecast but down 3.7 bushels from 2018. That results in a total harvest of 3.55 billion bushels, down slightly from the previous forecast and down 20% from last year.

The 2019-20 soybean price received by producers was forecast at $9 per bushel, unchanged from last month but 52 cents more than the 2018-19 average. The projected soybean meal prices was also unchanged at $325 per ton, nearly $17 more than 2018-19.

  • Dry hay: The November Crop Production report did not have information related to dry hay or other forages.

  • Cottonseed: The USDA reduced expected cotton acreage from the previous forecast, although it’s still larger than 2018. As a result, the 2019 cottonseed harvest was forecast at 6.453 million tons, down about 272,000 tons from last month’s forecast. Despite the downward adjustment, it would still be up about 822,000 tons from last year and the highest total since 2007.  end mark
Dave Natzke
  • Dave Natzke

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