U.S. Milk Production Projections Reduced for 2014, Increased for…
According to the October USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2014 U.S. milk production projections were reduced from 206.3 billion lbs to 206.1 billion lbs, on slower growth in milk per cow. 2014 projected production of 206.1 billion lbs equates to a 2.4% YOY increase from 2013 production of 201.2 billion lbs and would be a record high production level on an absolute basis. The projected 2.4% YOY increase in milk production is over triple the 2013 YOY milk production increase. 2013 milk production of 201.2 billion lbs resulted in a 0.4% YOY increase and a 0.7% YOY increase when adjusting for leap year. 2014 YTD (Jan-Aug) milk production is up 1.8% YOY; implying YOY milk production growth is expected to accelerate by 3.9% throughout the remainder of the year.
2015 U.S. milk production projections were raised from 212.5 billion pounds to 212.8 billion pounds as growth in output per cow is expected higher with relatively lower-priced feed. 2015 projected production equates to a 3.3% YOY increase over 2014 projected production of 206.1 billion lbs. The projected 3.3% YOY increase in production would be the largest in ten years.
Export forecasts for 2014 were lowered as domestic dairy prices remain uncompetitive in global markets, but import forecasts were raised as relatively high U.S. prices have encouraged additional imports. Butter, cheese and whey price forecasts were raised for 2014 as domestic demand continues to support prices. NFDM price forecasts were lowered for both 2014 and 2015 as U.S. prices are expected to decline to increase the competitiveness of NFDM exports.
The Class III price forecast was raised for 2014 on stronger cheese and whey prices, but remains unchanged for 2015. The Class IV price forecast was also raised for 2014 as higher butter prices more than offset the decline in NFDM prices, but for 2015, the lower forecasted NFDM prices resulted in a lower Class IV price. As shown in the chart below, the forecasted 2014 all-milk price range of $24.10-$24.20 per cwt reached new highs. The 2015 all-milk price is expected to be well below the 2014 price, and was lowered $0.45-$0.55 to $18.95-$19.85 per cwt.