U.S. Milk Production Projections Lowered – Jan ’15
According to the January USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2014 projected U.S. milk production was lowered to 206.0 billion lbs, down 0.2 billion lbs from the previous report. 2014 projected production of 206.0 billion lbs equates to a 2.4% YOY increase from 2013 production of 201.2 billion lbs and would be a record high production level on an absolute basis. The projected 2.4% YOY increase in milk production is over triple the 2013 YOY milk production increase. 2013 milk production of 201.2 billion lbs resulted in a 0.4% YOY increase and a 0.7% YOY increase when adjusting for leap year. 2014 YTD (Jan-Nov) milk production is up 2.3% YOY; implying YOY milk production growth is expected to increase by 3.3% in Dec ’14, consistent with the Nov ’14 milk production YOY increase of 3.4%. 2015 U.S. milk production projections were reduced from 212.2 billion pounds to 211.7 billion lbs on slower growth in cow numbers and milk per cow. 2015 projected production of 211.7 billion lbs was the lowest projected production figure since 2015 estimates were originated in Apr ’14 but equates to a robust 2.8% YOY increase over 2014 projected production of 206.0 billion lbs. The projected 2.8% YOY increase in production would be the largest in ten years. Export forecasts on a skim-solids basis were raised for 2014 and 2015 due to stronger sales of whey and NFDM. Export forecasts on a fat-basis were unchanged for 2014 and raised slightly for 2015. Ending stocks for 2014 were raised on weaker than expected domestic demand. Dairy product prices for 2015 were reduced as carry-in stocks were higher than expected, however demand is expected to strengthen later in the year with lower price levels, limiting further price declines. Class III and Class IV price forecasts for 2015 were lowered on weaker product prices. As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, and was lowered $0.70 to $17.75-$18.55 per cwt. 2015 all-milk price forecasts have been reduced in each of the last five WASDE reports, and are currently at a 24.3% discount to 2014 All-Milk price estimates.