Dairy Outlook by dffhrtcv3

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									  Dairy Market Outlook and Policy Update




                        Prepared for the
                Midwest, Great Plains & Western
                 Extension Outlook Conference,
                     Louisville, KY August 15-16, 2011
      Cam Thraen, OSU Extension State Specialist, Dairy
      John Newton, OSU AEDE Ph.D. Graduate Student
Website at AEDE/OSU: http://aede.ag.ohio-state.edu/programs/OhioDairy/
                      Midwest, Great Plains, Western Extension
                                   Outlook 2011
 Summary data on price, cost and margins: Ohio 2003 - 2011




Margins for Ohio dairy farms in 2011 rank the second best in the last nine years!




                             Midwest, Great Plains, Western Extension
                                          Outlook 2011
Milk Cows: U.S.



                               Dairy cow numbers continue to advance.
                               The U.S. herd has added back 104 thousand of
                               the 2009 herd reduction of 230 thousand
                               head.

                               U.S. dairy cows are projected to average 9,185
                               thousand head this year. Ytd = 9,182 head.

                               Milk per cow is estimated at 21,305 pounds
                               this year and forecast at 21,665 pounds in
                               2012.



                  Midwest, Great Plains, Western Extension
                               Outlook 2011
Milk Production
                                               USDA July Milk Production report /
                                               23 major states:
                                               The strongest percentage increases in year-
                                               over-year milk production were posted in
                                               western States, with Texas(10.3),
                                               Colorado(6.8), and Washington(6.3),
                                               Idaho(5) & Oregon(5) leading the rise.

                                               Declines in milk production were observed
                                               in the Midwest with Missouri(-5.7),
                                               Minnesota(-4.6), Ohio(-4.2), Illinois(-3.7),
                                               and Iowa(-2.9) showing the largest declines
                                               in 2011 from 2010.

  With the trend in cows and yield the expectation is a continued expansion in
  milk production, with 195.7 billion pounds in 2011 and 198.8 billion
  pounds forecast for 2012 (1.5% increase).


                            Midwest, Great Plains, Western Extension
                                         Outlook 2011
                   West Surplus Region                                         East Deficit Region




                                                                                                     > 611 # capita




          West region is a surplus production region while East region is
          deficit. In 2010, the deficit gap =~ 200 million pounds.

Source: Marketing Service Bulletin, CFMO 32. July 2011.
                                                  Midwest, Great Plains, Western Extension
                                                               Outlook 2011
      Milk & Product Production by Region
                                                                    Production (%change vs. 2005) by
                                                                    Major Dairy Product
                                                                    Cheese:
            West                 Central                 Atlantic   West 43%(+16) / Central 44%(+15)
                                                                    / East 13%(+7)
                                                                    Butter:
                                                                    West 54%(+40) / Central 37%(-8) /
                                                                    East 9%(+22)
                                                                    NFDM:
                                                                    West 78%(+51) / Central 9%(-29) /
                                                                    East 13%(+11)
                                                                    Ice Cream:
 2010 Milk Production = 192.8 b#’s
                                                                    West 43%(-6) / Central 53%(-9) /
                                                                    East 22%(-29)




Source: Marketing Service Bulletin, CFMO 32. May 2011.
Trade: Imports                           Milk (fb) equivalent imports are
                                         placed at 3.4 billion pounds in 2011,
                                         declining to 3.2 billion pounds in
                                         2012.

                                         Imports (ss) are forecast at 5.0
                                         billion pounds for 2011 and 4.5
                                         billion pounds 2012.

                                         The downward trend in dairy
                                         imports that began on a fats basis in
                                         2007 and on a skims-solids basis in
                                         2008, will continue into 2012.




                 Midwest, Great Plains, Western Extension
                              Outlook 2011
                                                                 Milk (fb) equivalent exports are
Trade: Exports                                                   forecast at 8.8 billion pounds this
                                                                 year based on continued strong
                                                                 shipments of butterfat.

                                                                 Exports in 2012 are forecast at 8.7
                                                                 billion pounds.

                                                                 The competitive price advantage
                                                                 for U.S. butter in world markets has
                                                                 narrowed considerably, which
                                                                 could ultimately slow exports.

                                                                 Milk equivalent skims-solids
                                                                 exports were increased slightly
                                                                 from last month to 32.1 billion
U.S. dairy exports now earn $2 for each $1 of
                                                                 pounds for 2011 and are
imports versus less than $0.5 in 1990 !
                                                                 unchanged from last month at 32.3
                                                                 billion pounds forecast for next
                                                                 year.


                               Midwest, Great Plains, Western Extension
                                            Outlook 2011
Domestic Use                      Domestic commercial (fb) use is forecast at
                                  188.8 billion pounds this year.

                                  A stronger rise is forecast for 2012 as use is
                                  forecast to rise to 192.2 billion pounds.
                                   (not factoring in a renewed U.S. recession)

                                  Year-to-date use through May (vs. 2010):
                                            butter up +15%,
                                            American cheese +4%,
                                            Other cheese +7.1%.

                                  Domestic commercial use, on a skims-
                                  solids
                                  basis, is on track for a robust 2.1% year-
                                  over-year rise to 167.5 billion pounds for
                                  2011.

                                  For 2012, domestic use is forecast at 170.4
                                  billion pounds, a 1.7% increase.


               Midwest, Great Plains, Western Extension
                            Outlook 2011
Dairy Product Prices
                                  Dairy product prices continue to be revised
                                  upward.

                                  Cheese prices are projected higher based on
                                  current price strength.

                                  Butter prices may have reached
                                  their zenith in the second quarter.

                                  Increased butter and nonfat dry milk (NDM)
                                  production, both domestically and
                                  internationally, could lower prices later in
                                  the year for both products.

                                  Butter prices could firm toward the end of
                                  2011 as more milk moves to cheese
                                  production.



               Midwest, Great Plains, Western Extension
                            Outlook 2011
Dairy Product Prices: 2011
 Butter prices $1.925 to $1.985
 Cheese prices $1.815 to $1.845
 NDM prices $1.520 to $1.550
 Whey prices $0.475 to $0.495
 The Class III price is forecast at $18.00 to $18.30 per cwt.
 The Class IV price continues to lead Class III prices both this year and next,
 averaging $19.15 to $19.55 per cwt.
 The U.S. All Milk price is forecast to average $20.00 to $20.30 per cwt.




                              Midwest, Great Plains, Western Extension
                                           Outlook 2011
Price Outlook: 2012
 The price outlook for the major dairy products points to slowly declining milk
                 prices toward the end of 2011 and into 2012.

 Butter price is forecast to decline to $1.615 to $1.745 per pound.

Cheese prices are expected to fall to $1.660 $1.760 per pound.

NDM prices forecast to decline slightly to average $1.375 to $1.445 per pound.

Whey price is expected to average $0.41 - $0.44 per pound.

Class 3 price is expected to be $16.00 to $17.00 per cwt next year.

Class 4 forecast to be $16.50 to $17.60 per cwt.

U.S. All Milk price forecast range $17.75 to $18.75 per cwt in 2012.




                              Midwest, Great Plains, Western Extension
                                           Outlook 2011
CME Futures Price Outlook: 2011 -2012




Website at AEDE/OSU:

http://aede.ag.ohio-state.edu/programs/OhioDairy/ Extension
                               Midwest, Great Plains, Western
                                          Outlook 2011
CME Futures Price Outlook: 2011 -2012




This table is updated daily at the AEDE/OSU Dairy Website :

http://aede.ag.ohio-state.edu/programs/OhioDairy/


                              Midwest, Great Plains, Western Extension
                                           Outlook 2011

								
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