The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report was released July 12. Compared to last month, the USDA left the 2023 milk production estimate unchanged but reduced 2024 production expectations slightly. The outlook for prices continues to weaken.
- At 228.4 billion pounds, the 2023 production forecast was unchanged. If realized, 2023 production would be up just 0.8% from 2022.
For 2023, the projected annual average price for butter was raised slightly, but prices for cheese, dry whey and nonfat dry milk (NDM) were all lowered. As a result, the projected 2023 Class III price was cut 65 cents to $16.05 per hundredweight (cwt), while the Class IV price forecast was reduced 15 cents to $18.20 per cwt. The projected 2023 all-milk price was cut 40 cents to $19.55 per cwt.
- In its forecast for 2024, the USDA estimated milk production at 230.6 billion pounds, down 200 million pounds from a month earlier, based on lower dairy cow inventories and slower growth in milk per cow countered by an additional milking day in leap year. If realized, 2024 production would be up less than 1% from 2023.
Milk price projections for 2024 again follow patterns similar to 2023: Class III and all-milk price forecasts were lowered from last month, with the Class IV price unchanged. All will be lower than 2023 averages. The 2024 Class III price forecast is $15.95 per cwt, the Class IV price forecast is $17.45 per cwt, and the 2024 all-milk price is $19.10 per cwt.
Current futures prices
The USDA milk price forecast is mixed compared to current milk futures prices. At the close of trading on July 11, Chicago Mercantile Exchange (CME) 2023 Class III milk prices averaged $16.87 per cwt, with a third-quarter average of just $15.16 per cwt. The 2023 Class IV milk futures price averaged $18.19 per cwt for the full year, with a third-quarter average of $17.80 per cwt.
Beef outlook
For 2023, the beef production forecast was raised from last month based on higher slaughter rates, including steers, heifers, cows and bulls. For 2024, the beef production forecast was lowered as expected fed cattle marketings are shifted into late 2023 rather than early 2024. Cattle price forecasts were raised from last month on firm demand and relatively tight supplies, and that price strength is expected to carry into 2024.
Potentially affecting cull cow prices, the fed cattle price forecast for 2023 was estimated at $175.30 per cwt, up $3.60 from last month’s forecast. The early forecast for 2024 was estimated even higher at $184 per cwt.
Feed supply, price forecasts
Also released on July 12, the USDA’s Crop Production report primarily covered wheat. However, the WASDE report provided potential insights into dairy feedstuff supplies and prices:
- Corn: This month’s WASDE 2023-24 U.S. corn outlook calls for fractionally higher supplies and ending stocks. Corn production was forecast up 55 million bushels as greater planted and harvested area was partially offset by a four-bushel reduction in yield to 177.5 bushels per acre. At $4.80 per bushel, the projected season-average corn price received by producers was unchanged from the June forecast but is down $1.80 (27%) from the 2022-23 average of $6.60 per bushel.
- Soybeans: The 2023-24 U.S. soybean outlook reduced forecast supplies by 185 million bushels primarily due to lower harvested area. The soybean yield forecast was unchanged at 52 bushels per acre. The 2023-24 U.S. season-average soybean price received by producers was forecast at $12.40 per bushel, up 30 cents from last month’s forecast. It compares with an average price of $14.20 per bushel in 2022-23. Soybean meal prices were forecast to average $375 per ton, up $10 from last month’s forecast but $75 less than the 2022-23 average of $450 per ton
- Cottonseed: As a precursor of cottonseed availability, the USDA increased the cotton harvested area forecast by 117,000 acres, providing support for higher ending stocks.
