The USDA’s August World Ag Supply and Demand Estimates (WASDE) report left the outlook for 2018 milk production unchanged, but raised the 2019 forecast based on slightly higher cow numbers and increased milk per cow.
Estimated at 217.9 billion pounds, 2018 production would be up just 1.1 percent from 2017. Based on current estimates, USDA raised the price outlook, but only by about 10 to 25 cents per hundredweight (cwt) compared to a month ago. Projected annual average prices (midpoint of range) for 2018 are: Class III – $14.60 per cwt; Class IV – $14.10 per cwt; and all-milk – $16.20 per cwt. With the reductions, the projected average all-milk price for 2018 is now 10 cents below that seen in 2016.
For 2019, the USDA bumped its August milk production forecast to 220.9 billion pounds, about 300 million pounds more than July’s forecast. If realized, it would be up 1.4 percent from the level forecast for 2018. In its price projections for next year, the USDA forecast (midpoint of range): Class III – $15.45 per cwt; Class IV – $14.30 per cwt; and all-milk – $16.95 per cwt. Those estimates are also up 10 to 25 cents from last month’s forecast, but remain weaker than prices seen in 2017.
Coming: The USDA’s July 2018 Milk Production report will be released Aug. 20.
Beef outlook
The USDA cut its 2018 beef production estimate, largely reflecting a slower pace of marketings in the third quarter. Cow slaughter was expected to increase. The beef production forecast for 2019 was raised based on anticipation of heavier carcass weights. Cattle price forecasts were unchanged at the midpoint for both 2018 and 2019.
Feed outlook
The monthly WASDE report coincided with USDA’s August Crop Production report, providing insights on feed supplies and costs.
The 2018 corn harvest is forecast at 14.6 billion bushels, down less than 1 percent from last year but up 356 million bushels from the July projection. Area harvested for grain is forecast at 81.8 million acres, unchanged from the June forecast but down 1 percent from 2017. Based on conditions as of Aug. 1, yields are expected to average 178.4 bushels per acre, up 1.8 bushels from 2017. If realized, this will be the highest U.S. yield on record.
As a result of this year’s larger corn crop, the 2018-19 U.S. corn outlook is for larger supplies, greater feed and residual use, increased exports and larger ending stocks. The projected season-average corn price received by producers was reduced 20 cents at the midpoint to $3.60 per bushel.
Soybean production is forecast at 4.59 billion bushels, up 4 percent from last year. Area for harvest is forecast at 88.9 million acres, unchanged from the June forecast but down 1 percent from 2017. Based on conditions as of Aug. 1, yields are expected to average 51.6 bushels per acre, up 2.5 bushels from last year.
With higher production more than offsetting lower beginning stocks, soybean supplies for 2018-19 are projected at a record 5.04 billion bushels, 5 percent more than last month. Soybean price forecasts remain in a very large range, from a low of $7.65 to a high of $10.15 per bushel. At the midpoint, projected 2018-19 marketing-year average prices paid to growers for soybeans were reduced to $8.90 per bushel, down 35 cents from last month. The soybean meal price forecast, in a range of $295 to $335 per ton, is down $20 at the midpoint.
USDA updates 2018-crop hay forecast
The Crop Production report also updated estimates for 2018 dry hay production.
Production of alfalfa and alfalfa mixture dry hay for 2018 is forecast at 57.8 million tons, up 5 percent from 2017. Based on Aug. 1 conditions, yields are expected to average 3.33 tons per acre, up 0.01 ton from last year. Harvested area is forecast at 17.4 million acres, unchanged from the June forecast, but up 5 percent from 2017.
Contributing to the increase, alfalfa hay production in Montana, North Dakota and South Dakota – the top three states in area of alfalfa and alfalfa mixtures in 2018 – will rebound sharply from last year’s drought, according to the report. In addition, record high yields are expected in California, Nebraska and Washington.
Production of other hay is forecast at 70.7 million tons, down 7 percent from 2017. Based on Aug. 1 conditions, yields are expected to average 1.88 tons per acre, down 0.17 ton from last year. Harvested area is forecast at 37.7 million acres, unchanged from the June forecast, but up 1 percent from 2017.
Texas, Missouri, Oklahoma and Kansas, four of the top five states in area of other hay in 2018, are experiencing drought conditions of varying intensity. As a result, each of these states is expecting lower yields than last year. That will be offset somewhat by more favorable conditions in Georgia, Montana, Nebraska and Wyoming, where producers are expecting record-high yields in 2018. 
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Dave Natzke
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