The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report was released Aug. 11. Milk production forecasts for 2023 and 2024 were reduced from last month, with cow numbers lowered for both years. Output per cow was reduced for 2023 but unchanged for 2024. Restrictions on production growth provided some support for a slightly better price outlook.
- At 227.9 billion pounds, the 2023 production forecast was cut 500 million pounds from last month’s estimate. If realized, 2023 production would be up just 0.6% from 2022.
Forecasts for 2023 butter and cheese prices were raised from the previous month; the whey price forecast was lowered and the forecast for nonfat dry milk (NDM) was raised slightly. As a result, the projected 2023 Class III price was raised 85 cents to $16.90 per hundredweight (cwt), as the higher cheese price more than offsets the lower whey price. The 2023 Class IV price forecast was raised 30 cents due to higher butter and NDM prices. The projected all-milk price for 2023 was raised to 40 cents to $19.95 per cwt.
- In its forecast for 2024, the USDA estimated milk production at 230.5 billion pounds, down 100 million pounds from a month earlier. If realized, 2024 production would be up about 1% from 2023. There’s an additional milking day in leap year.
For 2024, butter and cheese price forecasts were raised with the strength in prices carrying over from 2023. Whey prices were lowered, while the NDM forecast was unchanged.
Milk price projections for 2024 were forecast higher than last month but remain below 2023 averages. The projected Class III milk price was raised 60 cents to $16.55 per cwt, the Class IV price was raised 35 cents to $17.80 per cwt, and the all-milk price was raised 25 cents to $19.35 per cwt.
Beef outlook
For 2023, the beef production forecast was lowered on lower steer and heifer slaughter and lighter dressed weights, although cow slaughter is increased. For 2024, the beef production forecast was raised, reflecting higher expected placements in late 2023 and early 2024. Cow slaughter was also raised for the first part of 2024.
Potentially affecting cull cow prices, fed cattle price forecasts for 2023 and 2024 were raised on continued firm packer demand. The fed cattle price forecast for 2023 was estimated at $178.50 per cwt, up $3.20 from last month’s forecast. Highest prices are expected in the fourth quarter. The early forecast for 2024 was estimated even higher at $186 per cwt.
Feed supply, price forecasts
The USDA’s Crop Production and WASDE reports provided potential insights into dairy feedstuff supplies and prices:
- Corn: This month’s WASDE 2023-24 U.S. corn outlook called for reduced supplies, lower domestic use, smaller exports and tighter ending stocks. Corn production for 2023-24 was forecast at 15.1 billion bushels, down 209 million from the July projection but up 10% from 2022. If realized, it would be the second highest on record, behind 2016-17. The season’s first survey-based corn yield forecast, at 175.1 bushels per acre, is 2.4 bushels lower than last month’s projection. Area harvested for grain, forecast at 86.3 million acres, was unchanged from the June forecast but up 9% from the previous year.
At $4.90 per bushel, the projected season-average corn price received by producers was up 10 cents from the July forecast but is down $1.70 (26%) from the 2022-23 average of $6.60 per bushel.
- Soybeans: The 2023-24 U.S. soybean outlook included higher beginning stocks and lower production and exports. Harvested area was forecast at 82.7 million acres, unchanged from July’s estimate but down 4% from 2022. The first survey-based soybean yield forecast of 50.9 bushels per acre is reduced 1.1 bushels from last month. Soybean supplies for 2023-24 are projected at 4.5 billion bushels, down 2% from last year.
The 2023-24 U.S. season-average soybean price received by producers was forecast at $12.70 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 $380 per ton, up $5 from last month’s forecast but $75 (16%) less than the 2022-23 average of $455 per ton.
- Dry hay: Production of alfalfa and alfalfa mixture dry hay for 2023 was forecast at 48.9 million tons, up 2% from 2022. Based on Aug. 1 conditions, yields are expected to average 3.13 tons per acre, down 0.09 ton from last year. Harvested area is forecast at 15.7 million acres, unchanged from the USDA’s June Acreage report, but up 5% from 2022.
Production of other hay was forecast at 69.9 million tons, up 8% from 2022. Based on Aug. 1 conditions, the U.S. yield is expected to average 1.92 tons per acre, up 0.05 ton from last year. Harvested area is forecast at 36.3 million acres, unchanged from the Acreage report, but up 5% from 2022. Record-high yields are expected in Alabama, Colorado, Georgia, Idaho and Wyoming.
- Cottonseed: As a precursor of cottonseed availability, the USDA’s first survey-based estimate of production for 2023-24 was lowered, with the crop reduced by higher projected abandonment and reduced yield in the Southwest. Even so, all cotton area harvested was forecast at 8.62 million acres, up 18% from 2022.
Coming up
Bookmark Progressive Dairy’s website for upcoming analysis of the USDA reports on cull cow marketing, the September Class I base milk price, August Federal Milk Marketing Order (FMMO) Class II-III-IV milk prices, the July Dairy Margin Coverage (DMC) program margin and indemnity payment announcements, the September Risk Management Calendar and more.
