USDA’s September 2017 milk production estimates will be released after PD-Extra’s deadline. However, the USDA raised milk production forecasts for both 2017 and 2018 in last week’s World Ag Supply and Demand Estimates (WASDE) report. Growth in milk per cow was expected to pick up the pace, more than offsetting a slower rate of herd expansion.
Anticipated milk production in 2017 was raised 200 million pounds from the previous month’s forecast to 216.2 billion pounds. If realized, 2017 production would be up about 1.8 percent from 2016’s total of 212.4 billion pounds.
Looking ahead to 2018, the USDA forecast production at 220.4 billion pounds, up 300 million pounds from the previous month’s estimate. If realized, 2018 production would be up about 1.9 percent from 2017’s estimate.
Expected fat-basis exports were raised for 2017 on stronger butter and cheese exports, and increased sales of butter and anhydrous milkfat are expected to support higher fat-basis exports in 2018. Skim-solids exports for 2017 and 2018 were raised, primarily on stronger expected shipments of whey products.
Fat-basis imports for 2017 and 2018 were raised on strength in butter imports but skim-solids imports were lowered for 2017 and unchanged for 2018.
For 2017, projected butter and nonfat dry milk (NDM) prices were lowered on large supplies, but the whey price was unchanged at the midpoint and the cheese price forecast was raised on current demand strength. For 2018, continued demand strength for cheese was reflected in a higher price forecast, while butter, NDM and whey prices were lowered on larger supplies and pressure from international prices.
Price projections
As a result, the projected 2017 Class III price was raised to $16.20 (midpoint) per hundredweight (cwt) on stronger cheese prices. Lower whey prices were expected to more than offset the increases in cheese prices in 2018. The projected mid-point price was $16.45 per cwt.
The projected 2017 Class IV price was lowered for both 2017 ($15.35 per cwt) and 2018 ($15.20 per cwt) due to lower forecast butter and NDM prices.
The 2017 all milk price forecast range was projected at about $17.80 per cwt, with the 2018 mid-point price estimated at $17.90 per cwt.
Beef outlook
Estimated 2017 beef production was reduced from the previous month, largely due to lower expected fourth-quarter carcass weights.
Beef production was lowered for the first half of 2018, as good pasture conditions are expected to slow the pace of feedlot placements late this year. However, heavier carcass weights are expected to offset part of the decline.
Steer price forecasts were unchanged for 2017 and 2018. The USDA projected fourth-quarter 2017 prices to average about $110 per cwt, resulting in a full-year average of $119.55 per cwt. Only a slight improvement was predicted for 2018, with the annual average of about $115 per cwt.
Feed forecasts
USDA’s Oct. 12 Crop Production and World Ag Supply and Demand Estimates reports provided updates on 2017 corn, soybean, hay and cottonseed crops.
• Corn production was forecast at 14.3 billion bushels, up 1 percent from the September forecast. Yields were expected to average 171.8 bushels per acre, up 1.9 bushels. If realized, this will be the second highest yield and production on record for the U.S. The projected range for the 2017-2018 season-average corn price received by producers was unchanged at $2.80 to $3.60 per bushel, with a midpoint at $3.20 per bushel. The 2016-2017 average was about $3.35 per bushel.
• Soybean production was forecast at a record 4.43 billion bushels, down slightly from September. Yields were expected to average 49.5 bushels per acre, down 0.4 bushel. Area for harvest was forecast at a record-high 89.5 million acres. The 2017-2018 U.S. season-average soybean price was forecast in a wide range of $8.35 to $10.05 per bushel, or $9.20 per bushel at the midpoint. The 2016-2017 average was $9.50 per bushel. Soybean meal price projections were unchanged at $290 to $330 per ton ($310 per ton midpoint). It averaged $320 per ton in 2016-2017.
• Hay: Production of alfalfa and alfalfa mixture dry hay for 2017 was forecast at 56 million tons. Harvested area was forecast at 17.1 million acres, with yields averaging 3.27 tons per acre. Montana, North Dakota and South Dakota, the top three alfalfa states in terms of acreage, experienced drought-related yield reductions, but record-high yields were expected in Arizona, Idaho, Indiana, Kentucky, Nebraska and Oregon.
Production of other hay was forecast at 75.9 million tons. Harvested area was forecast at 36.4 million acres, with yields averaging 2.08 tons per acre. Record-high yields were forecast for Alabama, Idaho, Kentucky, Missouri, Nebraska and Oklahoma.
• Cottonseed: Yet another hurricane, Nate, resulted in damage to the U.S. cotton crop, primarily in Alabama. But despite all the hurricanes, contracted prices for cottonseed are at 10-year lows, according to Nigel Adcock with Cottonseed LLC, LaCrosse, Wisconsin. USDA’s Oct. 12 crop production report reduced the estimated 2017 cottonseed harvest to 6.676 million tons, down about 191,000 tons from pre-hurricane forecasts. The 2017 cotton harvest was slowed by wet weather, resulting in less new-crop cottonseed being available. Adcock expected most gins to be running at full schedule by mid-October. The export business remains slow, keeping a lid on any potential price rally. However, freight rates are substantially higher than a year ago. 
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Dave Natzke
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