USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report made another cut to the 2017 U.S. milk production forecast, with a slowdown in the growth of milk per cow. Despite the reduction, USDA narrowed projected 2017 milk and dairy product prices, adjusting overall prices down slightly.
Anticipated milk production in 2017 was cut about 400 million pounds from last month’s forecast, to 216.9 billion pounds. If realized, production would be up by about 2.1 percent from 2016’s total of 212.4 billion pounds.
USDA also issued its first milk production forecast for 2018, at 222.0 billion pounds. If realized, 2018 production would be up by about 2.3 percent from 2017’s estimate. The increase is based on expectations of stronger milk prices and moderate feed prices.
Compared to a month earlier, 2017 nonfat dry milk prices were forecast a penny per pound higher, but butter prices were forecast one-half cent per pound lower. Cheese and dry prices were unchanged. As a result, projected 2017 Class III prices were unchanged in a range of $16.10-$16.60 per hundredweight (cwt), but Class IV prices were forecast up a nickel in a range of $14.35-$14.95 per cwt. The all milk price is forecast at $17.35-$17.85 per cwt for 2017.
Cheese and nonfat dry milk prices are forecast higher in 2018. The all milk price is forecast in a range of $17.55-$18.55 per cwt for 2018.
Feed outlook
This month’s U.S. corn outlook forecasts the 2017-18 corn crop at 14.1 billion bushels, down from last year’s record high with a lower forecast area and yield. The smaller corn crop is partly offset by the largest projected beginning stocks since 1988-89, leaving total corn supplies down from a year ago but still the second highest on record.
The projected range for the 2016-17 season-average corn price received by producers was unchanged at $3.25-$3.55 per bushel, with a midpoint unchanged at $3.40 per bushel. The 2015-16 average was $3.61 per bushel; the early 2017-18 forecast is $3.00-$3.80 per bushel.
The 2017-18 outlook for U.S. soybeans is for higher supplies, crush, exports and ending stocks. The soybean crop is projected at 4.255 billion bushels, down 52 million from last year’s record crop. With sharply higher beginning stocks, soybean supplies are projected at 4.715 million bushels, up 4 percent from 2016-17.
Projected prices paid to soybean producers for 2016-17 averaged $9.55 per bushel. The 2015-16 average was $8.95 per bushel; the early 2017-18 range is wide at $8.30-$10.30 per bushel.
The soybean meal price averaged $320 per ton in 2016-17. The 2015-16 average was $325 per ton; the early 2017-18 range is $295-$335 per ton.
Hay stocks
USDA’s latest crop production report offered little in the way of new information affecting the markets, but did provide an estimate of hay inventories. All hay stored on U.S. farms as of May 1 totaled 24.4 million tons, down 3 percent from the previous May. Disappearance from Dec. 1, 2016 - May 1, 2017 totaled 71.4 million tons, compared with 69.9 million tons for the same period a year earlier.
With the exception of Nevada, hay stocks in most western states were estimated lower than in 2016. Among major dairy states, largest year-to-year declines were in Colorado, Idaho, Kansas, Oregon, South Dakota, Utah and Washington.
The majority of the eastern states reported higher stocks compared to the previous year. Among major dairy states in the eastern half of the country, hay inventories were larger in Indiana, Minnesota, New York, Ohio, Pennsylvania and Virginia, but down in Florida and Michigan.
Beef outlook
Impacting cull cow prices, the WASDE report reduced the forecast for 2017 beef production, citing lighter carcass weights. Cattle placements during the second half 2017 and early 2018 are forecast higher. Combined with heavier expected carcass weights, beef production is forecast to increase next year.
The first-quarter 2017 steer price was estimated at nearly $123 per cwt. Prices are forecast to increase in the second quarter, but then decline through the rest of the year, averaging $120-$125 per cwt for the year. The 2016 steer price averaged $121 per cwt; the early 2018 forecast is in a range of $113-$123 per cwt. 
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Dave Natzke
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