Corn prices are moderating for both the current crop year and for 2012/13. The corn price is projected to be $5.95 to $6.25 a bushel in 2011/12, a decline from April’s projected price and to slip to $4.20 to $5.00 a bushel next year. Higher corn plantings and higher expected yield could lead to a record-high corn supply in 2012/13 despite tight carryin stocks. The recent Crop Progress report showed a crop well ahead of average development for this time of year. While this is no guarantee of above-average yields, it minimizes the risk of yield loss due to late planting. Soybean meal prices continue to inch upward; this month’s forecast calls for soybean meal prices to average $360 a ton for the current crop year, up from April’s forecast. For 2012/13, prices are forecast at $335 to $360 a ton. The April Agricultural Prices reported the preliminary estimate of alfalfa hay prices at $207 per ton. Hay prices could move downward with the 2012/13 crop. The benchmark 16-percent protein dairy ration was calculated at $11.20 per cwt for January-March 2012. Given crop price forecasts, the ration value will likely head down later this year and could fall further in 2013. For dairy producers, the welcome relief from high feed prices will likely be countered by lower milk prices for the balance of 2012, with some recovery likely in 2013. On balance, the milk-feed price ratio is not expected to signal expansion until later in 2013.
The total number of milk cows for 2012 was raised slightly from April to 9.23 million head. The Milk Production report indicated higher than expected cow numbers and, despite weakening returns, producers were not reducing herds as quickly as expected. May is the first month for 2013 forecasts. The dairy herd in 2013 is expected to decline to 9.17 million head, reflecting 2012’s high feed prices and lower milk prices. Milk per cow for 2012 was boosted to 21,880 pounds from the April projection. Production per cow is forecast at 22,100 pounds for 2013. The rise in milk per cow this year is due to nearly ideal production conditions in much of the United States. Next year’s projected increase in production per cow reflects the moderating feed price outlook. Production for 2012 was raised this month to 201.9 billion pounds. The initial forecast for 2013 is for production to reach 202.6 billion pounds, based on higher output per cow.
Milk-equivalent imports on a fats basis are forecast at 3.3 billion pounds for both 2012 and 2013 and 5.4 and 5.2 billion pounds for 2012 and 2013 respectively on a skims-solids basis. Milk-equivalent exports on a fats basis are projected at 8.5 billion pounds in 2012, rising to 8.7 billion pounds next year. Exports on a skimsolids basis are estimated at 31.5 billion pounds this year and 32.4 billion pounds in 2013.
Higher than expected milk production and weaker-than-expected demand led to lowering of the 2012 prices for the major dairy products in May, except for whey. The cheese price was lowered to $1.555 to $1.605 per pound, butter was reduced to $1.425 to $1.505 per pound, and the nonfat dry milk price was revised to $1.235 to $1.275 per pound. The whey price was increased to 56.0 to 59.0 cents per pound as it appears demand is stronger than expected earlier. Next year’s milk production increase is modest, keeping with the herd-size declines, in response to 2012’s high feed prices and lower milk prices. Higher forecast exports and continued firm domestic demand should strengthen 2013 prices. The 2013 cheese price is forecast at $1.600 to $1.700 per pound, butter at $1.465 to $1.595 per pound and NDM at $1.320 to $1.390 per pound. Whey prices are forecast at 55.5 to 58.5 cents per pound, very near 2012 prices.
Milk prices for 2012 were revised downward based on lowered product prices. The Class III price is projected at $15.80 to $16.30 per cwt, the Class IV price was lowered to $14.50 to $15.10 per cwt and all milk is projected at $16.90 to $17.40 per cwt. In 2013, milk prices should recover. The Class III price is forecast at $16.20 to $17.20 per cwt, the Class IV price is forecast to rebound to $15.40 to $16.50 per cwt and the all milk price is expected to climb to $17.25 to $18.25 per cwt.