market outlook for dairy and forage 2014 idaho hay and...

Dairy Outlook 2014 Midwest & Great Plains Outlook Conference

Katelyn McCullock

Dairy & Forage Economist

Livestock Marketing Information Center

KEY TO DAIRY 2014

• Prices are record high

in the first half.

• Profitability has been

very good and will

remain.

• Dairy demand remains

strong worldwide

• Lower Feed Costs

• Rapid herd expansion:

Inventory?

• Drought –minimal

impact or restrained

growth?

• Export markets face

more competition:

Oceania production,

EU Quota, Russia?

08/04/14

12.00

14.00

16.00

18.00

20.00

22.00

24.00

26.00

28.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$ Per Pound

ALL MILK PRICE Dollars per CWT

Avg. 2008-12 2013 2014

Data Source: USDA-AMS, Dairy Market News, Compiled & Analysis by LMIC


Denotes New Record High *Previous was $22.10

08/04/14

-3.00

-2.50

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50


$ Per Pound

CLASS III – CLASS IV DIFFERENCE IN MILK PRICE

Avg. 2008-12 2013 2014

Data Source: USDA-AMS, Dairy Market News, Compiled & Analysis by LMIC


08/04/14

6

8

10

12

14

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

Mil. Pounds $ Per Pound

PRICE vs VOLUME CHEDDAR CHEESE 500 Pound Barrel, US, Weekly

Price Volume

Data Source: USDA-NASS


08/06/14

5

10

15

20

25

30

35

40


1000 MT

CHEESE AND CURD EXPORTS Monthly

Avg. 2008-12 2013 2014

Data Source: USDA-FAS


07/22/14

875

925

975

1025

1075

1125

1175

JAN MAR MAY JUL SEP NOV

Mil. Pounds

TOTAL CHEESE IN COLD STORAGE End of the Month

Avg. 2008-12 2013 2014

Data Source: USDA/NASS


08/06/14

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

JAN APR JUL OCT

$ Per Pound

BUTTER PRICES US, Weekly

Avg. 2008-12 2013 2014



07/22/14

100

150

200

250

300

350

JAN MAR MAY JUL SEP NOV

Mil. Pounds

BUTTER IN COLD STORAGE End of the Month

Avg. 2008-12 2013 2014

Data Source: USDA/NASS


08/06/14

0

2

4

6

8

10

12

14


1000 MT

BUTTER AND OIL EXPORTS Monthly

Avg. 2008-12 2013 2014



07/18/14

$0.75

$0.95

$1.15

$1.35

$1.55

$1.75

$1.95

$2.15

$2.35

JAN MAR MAY JUL SEP OCT DEC

$ per lb

OCEANIA BUTTER Biweekly

Avg. 2008-2012 2013 2014

Data Source: USDA-AMS


08/04/14

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80


$ Per Pound

MILK-FEED PRICE RATIO US, Monthly

Avg. 2008-12 2013 2014



WEATHER: HAY

• 2013 returned to normal for many states

• 2011: Texas 8% of total U.S. production down to 3% – CA represents 7% of U.S.

hay production in 2013

• Prices rose 56% nationally in 2011/2012

• CA Hay: 30% higher than 2013 in July

ALL HAY PRICE PERCENT CHANGES IN JULY

2013-2014

-45%

-34%

-34%

-33%

-31%

-28%

-24%

-23%

-23%

-20%

-20%

-11%

-6%

-4%

-4%

-3%

1%2%

2%

4%

5%

9%

18%

20%

20%30%

34%

-100% to -23%-23% to 0%0% to 9%9% to 35%

National Prices: All Hay: 1.1% Alfalfa: 3.3% Other: -4.0%

10

15

20

25

30

35

40

May Jul Sep

Percent

US RANGE AND PASTURE CONDITION Percent Poor and Very Poor, Weekly

Avg. 2008-12 2013 2014

Data Source: USDA-NASS, Compiled & Analysis by LMIC


G-NP-30

08/11/14

G-P-12

08/04/14

130

140

150

160

170

180

190

200

210

220

230

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

$ Per Ton

ALFALFA HAY – MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year

Avg. 08/09-12/13 2013/14 2014/15



G-P-13

08/04/14

100

110

120

130

140

150

160

MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR

$ Per Ton

OTHER HAY – MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year

Avg. 08/09-12/13 2013/14 2014/15



HAY OUTLOOK

• Objective yield numbers largely do not match price picture.

• Drought Monitor may be overstated

MILK PRODUCTION 2013

0.1%

0.1%

0.3%1.0%

1.2%

1.7%

2.2%

3.1%

4.0%

6.7%

20.5%

• West: 41% of Milk Production in 2013

• Nationally, almost all states increasing total production.

• Milk per cow is unknown, sequestration.

07/18/14

13.2

13.7

14.2

14.7

15.2

15.7

16.2

16.7

17.2


Bil Pounds

MILK PRODUCTION 23 States, Monthly

Avg. 2008-12 2013 2014



07/18/14

9170

9190

9210

9230

9250

9270

9290

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Thou. Head

DAIRY COW INVENTORY US Total, Monthly

Avg. 2008-12 2013 2014



Sequestration suspended data from March to July of 2013 from USDA-NASS.

These graphs use LMIC estimates during this time.

DAIRY COW HERD REPLACEMENTS July 1 Inventory

0.34

0.36

0.38

0.4

0.42

0.44

0.46

0.48

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Percent of Cow Herd



JULY CATTLE INVENTORY

Statistical Methodology • Survey Procedures: A random sample of United States producers was surveyed to provide data for these estimates. Survey

procedures ensured that all cattle producers, regardless of size, had a chance to be included in the survey. Data were

collected during the first half of June from about 40,000 small and medium sized operations. These operators were

contacted by face-to-face personal interviews. About 10,000 large producers and feedlots were contacted during the first half of July by mail, telephone, and face-to-face personal interviews. Operators were asked to report inventories as of the first of the month and calf crop for the entire year of 2014.

• Revision Policy: Revisions to previous estimates are made to improve year to year and item to item relationships. Estimates for the previous year are subject to revision when current estimates are made and when the January 1 cattle inventory estimates are made. The revisions are primarily based on livestock slaughter and additional foreign trade and survey data. Estimates will also be reviewed after data from the five-year Census of Agriculture are available. No revisions will be made after that date.

• Same as earlier years. Proportion of dairy sampled is ~40% had a dairy cows on their place of the 10, 000 large producers.

• Reliability estimates are not given for the specific categories.

– All Cows: Revisions are 0-600,000 head, average is about 210,000

• Figures no longer rounded to the nearest 50 thousand head

• Overlap with the quarterly milk production survey.

MILK PRODUCTION REPORT

• Milk Production survey sample size ~10k producers all shapes and sizes.

• Reliability estimates, 0-10,000, average 4,000 – Revision Policy: Milk production, milk per cow, and number of milk cows are subject to revision the following month

after initial publication for monthly States or the following quarter for the quarterly States. Normally, administrative data from Federal Market Orders, State Departments of Agriculture, or other sources are the main basis for revisions. However, administrative data for all States may not be available in time for these revisions. Estimates are again subject to revisions in February each year based on additional administrative data. In the event that additional changes are necessary, a third revision is possible in February the following year. Estimates are again reviewed after data from the five-year Census of Agriculture are available. No revisions are made after that date.

• Milk production report intended to be an average for the month. Meaning the July Milk Production Report data does not have to match July 1, cattle inventory

• July 1 inventory should be between June and July Milk Production Report.

IMPLICATIONS OF INVENTORY

• July Milk Production report: June revision should be down, with July

slightly up from month earlier OR July Inventory comes in close to

the July 1 figure

• Dairy Cow numbers are no longer growing.

• Beef herd also not retaining heifers…-2% from 2012 (-2% from

LMIC 2013 estimate, as well)

C-S-13

08/08/14

135

145

155

165

175

185

195

205

215

JAN APR JUL OCT

Thou. Head

HEIFER SLAUGHTER Federally Inspected, Weekly

Avg. 2008-12 2013 2014

Data Source: USDA-AMS & USDA-NASS


07/18/14

9180

9190

9200

9210

9220

9230

9240

9250

9260

9270

9280

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Thou. Head

DAIRY COW INVENTORY US Total, Monthly

Avg. 2008-12 2013 2014



Sequestration suspended data from March to July of 2013 from USDA-NASS.

These graphs use LMIC estimates during this time.

C-S-35

08/07/14

40

45

50

55

60

65

70

75

JAN APR JUL OCT

Thou. Head

DAIRY COW SLAUGHTER Federally Inspected, Weekly

Avg. 2008-12 2013 2014

Data Source: USDA-AMS & USDA-NASS


02/06/14

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bil. $

US DAIRY INDUSTRY EXPORT VALUES Annual

Live Cattle Milk,Crm&Pwdr Whey Nat Mlk Butter Cheese Casein

Data Source: USDA-FAS, Compiled & Analysis by LMIC


02/06/14

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Bil. $

US DAIRY INDUSTRY NET EXPORT VALUES Annual

Live Cattle Milk,Crm&Pwdr Whey Nat Mlk

Butter Cheese Casein Total

Data Source: USDA-FAS, Compiled & Analysis by LMIC


NEW ZEALAND DROUGHT

08/06/14

10

20

30

40

50

60

70

80


1000 MT

MILK AND CREAM EXPORTS Concentrated or Sweetened, Monthly

Avg. 2008-12 2013 2014



EXPORT GROWTH TWO-FOLD

• Mature vs. Emerging Markets

– Role of the Cold Chain

• Demand from existing markets

– Chinese economy

– Mexico

– World-wide increases in dairy

EXPORTS TO CHINA AND MEXICO EXPAND

303

753

0

200

400

600

800

1000

1200

1400

2009 2010 2011 2012 2013 2014 YTD

Thousands $

China Mexico Livestock Marketing Information Center


Questions

Katelyn McCullock Dairy & Forage Economist


Website: www.lmic.info [email protected]

Phone: 303-236-0467

http://www.lmic.info/

mailto:[email protected]

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