Milk Production Estimate Lowered
Published: Friday, July 22, 2022
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department again lowered its milk production estimates for 2022 and 2023 in the latest World Agricultural Supply and Demand Estimates report (WASDE), citing slower expected growth in milk per cow. It adds that the July 22 Cattle report will provide a mid-year estimate of the dairy cow inventory and producer intentions regarding retention of heifers for dairy cow replacement.
2022 production and marketings were estimated at 226 and 224.9 billion pounds, respectively, down 400 million pounds on production and down 500 million on marketings from last month's estimates. If realized, 2022 production and marketings would both be down 300 million pounds, or .1 percent, from 2021.
2023 production and marketings were estimated at 228.3 and 227.3 billion pounds, respectively, down 1 billion pounds on production and 900,000 pounds less on marketings. If realized, 2023 production would be up 2.3 billion pounds, or 1 percent, from 2022.
The 2022 butter price forecast was raised from last month on firm demand, while the cheese price forecast was lowered on continued large stocks. Forecasts for nonfat dry milk (NDM) and whey prices were unchanged.
With a lower cheese price, the 2022 Class III milk price was lowered while the Class IV price was raised due to higher butter prices. The 2022 Class III average was put at $22.80 per hundredweight, down a dime from last month's projection, and compares to $17.08 in 2021 and $18.16 in 2020. The 2023 average is estimated at $20.85, up 20 cents from a month ago.
The 2022 Class IV average was estimated at $24.70, up a nickel from last month's projection and compares to $16.09 in 2021 and $13.49 in 2020. The 2023 average is estimated at $22.30, up 40 cents from last month's estimate.
The 2023, price forecasts for cheese, butter and NDM were raised on expected lower production, but whey was lowered on expected weaker international prices.
The 2023 cheese price average was projected at $2.07 per pound, up 2 cents from last month's estimate, and compares to an expected 2022 average of $2.1850. The 2021 average was $1.6755.
Butter was projected to average $2.44 per pound in 2023, up 5.50 cents from last month's estimate, and compares to a projected $2.78 average in 2022, and a 2021 average of $1.7325.
Nonfat dry milk will average $1.6450 in 2023, according to USDA, a 2.50 cent higher price than a month ago, up from a projected $1.7550 in 2022, and the 2021 average of $1.2693.
Dry whey will only average 51.50 cents per pound in 2023, down from the projected 64 cent average in 2022, and compares to 57.44 cents in 2021.
This month's U.S. corn outlook is for larger supplies and higher ending stocks. Beginning stocks were raised 25 million bushels, based on reduced feed and residual use as indicated in the June 30 Grain Stocks report.
Corn production was forecast at 14.5 billion bushels, up 45 million, based on greater planted and harvested area from the June 30 Acreage report. Acreage was increased 400,000 acres, while the yield forecast was unchanged at 177 bushels per acre. Ending stocks were up 70 million bushels. The season-average farm price was lowered 10 cents to $6.65 per bushel.
Soybean production was projected at 4.5 billion bushels, down 135 million on lower harvested area. Harvested area, forecast at 87.5 million acres in the June 30 Acreage report was down 2.6 million from last month. The soybean yield forecast was unchanged at 51.5 bushels per acre.
With lower production partly offset by higher beginning stocks, soybean supplies were reduced 125 million bushels. Soybean crush was reduced 10 million bushels reflecting a lower soybean meal export forecast. Exports were reduced 65 million bushels to 2.14 billion on lower U.S. supplies, increased South American supplies, and lower global imports. With lower supplies only partly offset by reduced use, ending stocks were projected at 230 million bushels, down 50 million from last month. The season-average soybean price was forecast at $14.40 per bushel, down 30 cents from last month, with soybean meal projected at $390 per short ton, down $10, according to the WASDE.
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