dairy outlook 2014 dr. marin bozic
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Dairy Outlook 2014Dr. Marin Bozic
Minnesota Dairy Statistics: 2013 vs. 2012
2012 2013(p) Percent Change
Dairy Cows 465,000 465,000 0.0%Dairy Farms 4,079 3,808 -6.6%
Cows Per Farm 114 122 7.0%Milk per Cow 19,505 19,737 1.2%
Milk Per Cow (per day) 53.3 54.1 1.2%
Total Milk Production 9,071 mil lbs 9,177 mil lbs 1.4%Mailbox Price $19.47 $19.50 0.2%
Gross Dairy Farm Cash Revenue
$1,757,140,000
$1,817,737,000 3.0%
In Focus: Minnesota Dairy Herds By Size
FMMO 30 Dairy Statistics: 2013 vs. 2012
2013 YTD 2012 Percent Change
Class PricesClass I Price $20.35 $19.26 5.7%Class II Price $19.06 $16.64 14.6%Class III Price $17.81 $17.44 2.1%Class IV Price $18.66 $16.01 16.6%
Utilization Class I 10.6% 12.4% -1.8%Class II 2.7% 5.4% -2.7%Class III 85.5% 78.6% 6.9%
Class IV 1.1% 3.5% -2.4%
Class I Utilization Across Time and Space
-2,500-1,500
-500500
1,5002,5003,5004,5005,5006,500
Annu
al G
rowt
h in
the
U.S.
Milk
Pro
duct
ion
(Mil
LBs)
2001
2003
2005
2007
2009
2011
2013
-5050
150250350450550650
Annu
al G
rowt
h in
the
U.S.
Milk
Per
Cow
(Lbs
)
Commercial Disappearance
Q1-Q3 Year-on-Year Growth
(Million Lbs)Stocks
(Days of Consumption)
Product (Mil lbs)
2013 Q1-Q3 2013 2001-2013 2013 2001-
2013
Butter 1,356 27 35 31 39
American Cheese 3,310 87 49 53 51
Other Cheese 5,147 120 115 21 18
Total Cheese 8,457 207 164 -- --
NFDM 1,210 -233 49 34 32
Dairy Sales: Fluid Milk
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
136138140142144146148150152154
Daily
U.S
. Flu
id M
ilk
Sale
s (ro
lling
12-
mon
th a
vg.,
mil
lbs)
Fluid Milk Sales in 2013 projected 1.5 billion lbs (2.8%) lower than in 2012.
In Focus: Greek Yogurt
Product 2013 YTD (mil lbs)
Volume Change (mil lbs)
Total Yogurt 2,394 83.5
Greek Yogurt 748 247.6
• Greek yogurt volume up 49.5% vs 2012. • Greek yogurt market share 31%, up from
22.5% last year.• Drinkable Yogurts up 10% over 2012. • The number of new drinkable yogurt product introductions increased from 31 in 2011 to 115 in 2012.
Source: DMI, Multi-Outlet Retail Milk, Cheese and Yogurt Sales Snapshots, September, 2013
Dairy Exports
• Dairy exports equivalent to 58 days of U.S. milk production.• Dairy exports keep 1.4 million U.S. cows busy throughout the year.
New Zealand Drought Propelled U.S. Dairy Exports
New Zealand Drought Propelled U.S. Dairy Exports
Source: USDEC Dairy Outlook 2014
New Zealand Production Shocks U.S. Dairy Exports Risks
Feed Costs On the Decline
$0
$50
$100
$150
$200
$250
$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00$9.00
Alfalfa Hay Corn
Alfa
lfa H
ay $
/ton
Corn
for G
rain
$/b
u
20+ Percent Chance Corn Will Fall Below $4.00/bu
Milk Production To Rebound
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-1
2Jul
-12Oct-
12Jan
-13Ap
r-13
Jul-13
Oct-13
-10.0%-5.0%0.0%5.0%
10.0%15.0%
Milk Production Growth: California and Texas
California Texas
Milk Production To Rebound
Source: USDEC Dairy Outlook 2014
Class III milk price 50-75 cents lower, with a chance of meatballs
Forward Income over Feed Costs Margins Look Excellent
China Imports will either Make or Break the Market in 2014
Source: USDEC Dairy Outlook 2014
Market Still Expected to Be Tight
Source: USDEC Dairy Outlook 2014
What does this all mean for Minnesota?
My forecast is for 2014 Minnesota mailbox milk price to be $19.10, with more downside risk than upside potential - with 80% confidence I predict it will be between $17.00 and $20.00.
YearMailbox
Milk Price
2008 18.68
2009 13.03
2010 15.75
2011 19.99
2012 19.35
2013 19.51
U.S. Dairy Policy Outlook
The Critical Two Questions:For Democrats: Is No Deal better than Raw Deal?
For Republicans: Can they get more after the elections?
Dairy Outlook 2014
Midwest Dairy ExpoSt Cloud, MNDecember 4, 2013
Dr. Marin Bozicmbozic@umn.eduDepartment of Applied EconomicsUniversity of Minnesota-Twin Cities317c Ruttan Hall1994 Buford AvenueSt Paul, MN 55108
Photo Credits:Title Slide: Orange Patch Dairy, Sleepy Eye, MNCredits Slide: Zweber Family Farms, Elko, MN
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