US 2014 milk production outlook to hit 205.7 billion pounds

Publish time: 24th March, 2014      Source:
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March 24, 2014



US 2014 milk production outlook to hit 205.7 billion pounds


US milk output is expected to hit 205.7 billion pounds in 2014, up from 201.2 billion in 2013 and 200.5 billion in 2012, according to USDA''s World Agriculture Supply & Demand Estimates (WASDE) report, released March 10.



Product price forecasts for cheese, butter, non-fat dry milk (NDM) and whey were higher, supported by strong demand and price strength to date. Class III and Class IV price forecasts were raised on higher product prices.



The 2014 Class III milk price average was pegged at US$19.25 per hundredweight, up from the US$18.70 expected a month ago and compares to US$17.99 in 2013, US$17.44 in 2012 and US$18.37 in 2011. The Class IV average was put at US$20.70, up from last month''s US$20.20 and compares to US$19.05 in 2013, US$16.01 in 2012 and US$19.04 in 2011. The 2014 all milk price was forecast at US$21.40-US$22 per hundredweight.



Speaking of high milk prices, the National Milk Producers Federation (NMPF) newsletter reports that a rash of news stories in February has focused on the potential impact of rising farm-level milk prices, stoking fears of record-high consumer prices for dairy foods.



NMPF says it has provided important context to the issue, reminding the media that farm prices are just now climbing back to where they were in 2007-08, before the Great Recession devastated dairy markets. NMPF points out that dairy farmers have no control over retail milk prices, which vary widely from store to store. And farmers still get only about US$0.35 of every dollar the consumer spends on milk and dairy products, according to NMPF.



Farm prices are rising because increased global demand for dairy products, now being met in part with US exports, which amounted to more than 15% of total US production. As a result, the supply of milk in this country is not keeping up with demand.



Last year, milk production rose just four-tenths of 1%, as feed costs, weather and past low prices combined to keep a lid on farmers'' ability to expand output. Even with the recent price rise, however, dairy food inflation has lagged behind both the general inflation rate and the rise in all food costs for a decade, according to NMPF.



US exports picked up in 2014 where they left off in 2013, according to the US Dairy Export Council (USDEC). US suppliers shipped 162,999 tonnes of milk powder, cheese, butterfat, whey and lactose in January, up 19% from last year. That''s about the same volume as the last four months of 2013, says USDEC, and total value of all exports was US$583.7 million, up 35% from a year ago.



Cheese exports topped 32,000 tonnes for the first time, establishing a new record for the third month in a row. Sales to existing customers remained strong in January, while new sales were captured in Australia, Saudi Arabia, China and Egypt. US exporters also ramped up shipments of butterfat, whole milk powder and milk protein concentrate. On the other hand, exports of dry whey and whey protein concentrate (WPC) continue to lag prior-year levels. WPC exports in January were the lowest in nearly two years. Exports of nonfat dry milk/skim milk powder (NDM/SMP), at 38,761 tonnes, were higher than the diminished levels of last January but well below the levels registered in the last nine months of 2013 (average 49,849 tonnes/month).



In addition, NDM/SMP exports in January represented just 43% of US powder production for the month, leading to a greater-than average build-up of inventory. The slowdown in NDM/SMP exports is attributed to greater competition, particularly from the EU, which saw a milk production increase of 4.3% in the fourth quarter of 2013.



In a letter to US Trade Rep. Michael Froman and US Agriculture Secretary Tom Vilsack, over 50 US senators urged the US government to fight back against EU efforts to restrict how US companies market cheese and other foods. Under the guise of protecting European geographical indications (GIs), EU has been using free trade agreements to prevent cheese makers in the US and around the world from using common food names such as Parmesan, Feta, Havarti, Muenster and others.



The USDEC and NMPF applaud the Senate''s strong statement in support of the US dairy industry, as it comes at a critical time in the development of a free trade agreement between the US and the EU.



Favourable demand continued to move prices higher, according to USDA''s Dairy Market News. Domestic demand for retail is steady with some increased interest for process cheese. Mozzarella sales are also said to be increasing. Export demand is steady, with some additional forward sales receiving price assistance. Cheese production is increasing as milk supplies build seasonally across the country. Some Midwestern plants are buying surplus milk to increase production and fill orders.



Cash butter closed the week at US$1.88, unchanged on the week, but US$0.225 above a year ago. Eight cars traded hands on the week. US butter prices remain competitive with international prices fostering good export sales. The market tone is steady with supplies and retail orders gradually building.



Milk production is increasing across most of the country, according to USDA. There were no serious weather events affecting milk production or movement the week of March 3. More milk is moving through manufacturing plants, as Class I sales are sluggish. Processors are ramping up production of Class II products as warmer weather moves into the US Frozen dessert and ice cream accounts are increasing cream intakes, helping to keep cream supplies manageable.