USDA’s October World Ag Supply & Demand Estimates (WASDE) report forsees a lot more milk coming in 2016 and 2017, along with a weakening in projected milk prices. Rapidly growing cow numbers were cited for the milk production gains.
Anticipated milk production in 2016 was raised about 500 million pounds from last month’s forecast, to 212.7 billion pounds. If realized, production would be up about 2 percent from 2015.
Looking ahead to 2017, milk production was raised 1.2 billion pounds from the previous month’s forecast, to 217.3 billion pounds. If realized, production would be up nearly 2.2 percent from 2016’s estimate.
U.S. dairy import forecasts were raised on higher expected imports of butter and several other dairy products. Exports were forecast higher, as increases in Oceania prices and declining U.S. prices are expected to make the U.S. more competitive in world markets.
Projected cheese and butter prices for 2016 and 2017 were lowered due to higher than expected milk supplies. However, nonfat dry milk (NDM) and whey will likely benefit from increased competitiveness in export markets, supporting prices of those products.
Projected 2016-2017 Class III and Class IV prices were lowered from last month, as lower cheese prices more than offset the higher whey price in the Class III calculations, and the lower butter price outweighs the NDM price increase in the calculation of the Class IV price. All-milk prices were forecast lower compared to last month.
Milk price forecasts
Class III (dollars per cwt)
2015 – $15.80
2016 – $14.30 to $14.40
2017 – $14.20 to $15.10
Class IV (dollars per cwt)
2015 – $14.35
2016 – $13.60 to $13.80
2017 – $13.70 to $14.70
All-milk (dollars per cwt)
2015 – $17.12
2016 – $15.80 to $15.90
2017 – $15.55 to $16.45
Beef outlook
Impacting cull cow prices, the WASDE report raised the forecast for 2016 and 2017 beef production. Due to large supplies, projected average 2016 fed cattle prices were reduced to $122 per cwt; 2017 prices were forecast in a range of $112 to $121 per cwt, $5 to $6 less than last month’s forecast.
Feed outlook
Affecting the feed side of the dairy income equation, USDA also released its Crop Production report.
U.S. 2016 corn production was forecast at 15.1 billion bushels, up 11 percent from last year, but down slightly from September’s forecast. Area harvested for grain is forecast at 86.8 million acres, up slightly from the September forecast and up 8 percent from 2015. Based on conditions as of Oct. 1, yields are expected to average 173.4 bushels per acre, up 5 bushels from 2015. If realized, this will be the highest U.S. average yield and production on record. Record yields are forecast for Idaho, Illinois, Iowa, North Dakota, South Carolina, Washington and Wisconsin.
Combined with the lower production outlook, the WASDE report indicated higher exports will further cut into ending stocks, leading to higher prices. The projected range for the season-average corn price received by producers was raised a nickel on both ends, to $2.95 to $3.55 per bushel.
U.S. 2016 soybean production was forecast at a record 4.27 billion bushels, up 2 percent from September and up 9 percent from last year.
Based on Oct. 1 conditions, yields are expected to average a record 51.4 bushels per acre, up 0.8 bushel from last month and up 3.4 bushels from last year. Area for harvest was forecast at a record 83.0 million acres, up slightly from September and up 2 percent from 2015.
With the higher production, the WASDE report forecast higher ending stocks despite an increase in exports. The U.S. season-average soybean price for 2016-2017 was projected at $8.30 to $9.80 per bushel, unchanged from last month. Soybean meal price projections were also unchanged at $300 to $340 per ton.
Feed price forecasts
Corn (dollars per bushel)
2014/2015 – $3.70
2015/2016 – $3.61
2016/2017 – $2.95 to $3.55
Soybeans (dollars per bushel)
2014/2015 – $10.10
2015/2016 – $8.95
2016/2017 – $8.30 to $9.80
Soybean meal (dollars per ton)
2014/2015 – $368
2015/2016 – $325
2016/2017 – $300 to $340
A good year to make hay
USDA’s Crop Production report verified what most regional markets have been reporting: 2016 was a good year to make hay.
The report forecast 2016 production of alfalfa and alfalfa mixture dry hay at 62.8 million tons, up 7 percent from 2015. Based on Oct. 1 conditions, yields are expected to average 3.48 tons per acre, up 0.16 ton from last year. Harvested area is forecast at 18.1 million acres, unchanged from the August forecast but up 2 percent from 2015.
Growing conditions in the western U.S., despite continued dryness, are better than in 2015. Favorable conditions had Corn Belt producers expecting improved yields over 2015. When the harvest is completed, record high yields are expected in Indiana, Iowa, Nevada, Washington and Wisconsin.
Among major producers, Arizona, Michigan, Nebraska, North Dakota and South Dakota appear to be taking the biggest dip in production compared to a year earlier.
Production of other hay is forecast at 78.8 million tons, up 4 percent from 2015. Based on Oct. 1 conditions, yields are expected to average 2.07 tons per acre, up 0.01 ton from last year. If realized, the 2016 average yield will be a U.S. record, and total production will be the third highest on record, behind only 2004 and 2003. Harvested area is forecast at 38.1 million acres, unchanged from the August forecast but up 4 percent from 2015.
Due to adequate moisture, most producers in the Heartland region are expecting improved yields compared with 2015. In the West, production is expected to be higher than 2015 due to the combination of either increased harvested acres or higher expected yields. Producers in Colorado, Idaho, Illinois, Missouri, Montana, Nebraska and New York are expecting record high yields in 2016.
Cottonseed numbers cut
Finally, the cottonseed forecast was adjusted slightly lower, to 5.11 million tons, about 37,000 tons less than last month’s forecast. 
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Dave Natzke
- Editor
- Progressive Dairyman
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