The USDA’s October
Natzke dave
Editor / Progressive Dairy
World Ag Supply and Demand Estimates (WASDE) andCrop Productionreports were released Oct. 9. Slightly higher milk production was forecast for both 2020 and 2021, with the outlooks for milk prices also improved somewhat. Those milk price gains, however, will likely be offset by higher projected feed costs.

Milk production for 2020 was forecast at 222.3 billion pounds, up 300 million pounds from last month’s estimate. The increase was based on slightly higher cow numbers and a more rapid pace of growth in milk per cow. If realized, milk production would be up about 1.8% from 2019’s total of 218.4 billion pounds.

Annual average cheese and nonfat dry milk (NDM) price forecasts for 2020 were raised from last month; the whey forecast was unchanged, and the price forecast for butter was reduced. As a result, the projected 2020 all-milk price was raised 25 cents from last month to $18 per hundredweight (cwt). The Class III price forecast was also raised to $18 per cwt, up 75 cents from a month earlier, while the Class IV price was boosted a dime to $13.50 per cwt.

The USDA 2020 price outlook was in line with current Class III and Class IV futures prices. Using Chicago Mercantile Exchange (CME) futures prices at the close of trading on Oct. 9, the 2020 Class III price would average about $17.99 per cwt, while the Class IV price would average about $13.60 per cwt.


For 2021, a larger dairy herd and increased milk per cow are expected to support higher milk production. The USDA raised the overall production forecast to 225.5 billion pounds, up 100 million pounds from last month’s estimate. If realized, it would be up about 1.4% from 2020’s estimate.

The USDA projects somewhat lower milk prices in 2021, although estimates were up from a month earlier. Most of the decline is attributed to weaker cheese and Class III milk prices. The 2021 all-milk price was forecast at $17.60 per cwt, the Class III price at $17 per cwt and the Class IV price at $14.10 per cwt.

Compared to current futures prices, the USDA 2021 price outlook is higher than the CME Class III average but well below the CME Class IV average. As of the close of trading on Oct. 9, 2021 CME Class III futures prices averaged $16.71 per cwt for the year; Class iV futures prices averaged $15.76 per cwt.

Beef outlook improves

The forecast for 2020 and 2021 beef production was raised from the previous month on higher expected cattle slaughter. The cattle price forecast for 2020 was raised on current price strength and robust beef demand, and that strength is expected to carry into early 2021.

Feed costs to rise

Feed cost projections incorporated supply and demand estimates from the WASDE report, as well as the October Crop Production report.

  • Corn: This month’s 2020-21 U.S. corn outlook was for lower production, reduced corn used for ethanol and feed and residual use, and smaller ending stocks. Corn production was forecast at 14.72 billion bushels, with a reduction in harvested area and a slight decline in yield compared to last month’s forecast. It would still be the highest average yield and second-largest U.S. corn harvest on record. Record-high yields were forecast for Georgia, Indiana, Kentucky, Louisiana, Michigan, Minnesota, New York, North Dakota, South Carolina, South Dakota, Washington and Wisconsin.

The projected 2020-21 season-average corn price received by producers was raised 10 cents to $3.60 per bushel, but it’s still in line with marketing year averages of $3.56 and $3.61 in 2019-20 and 2018-19, respectively.

  • Soybeans: This month’s U.S. soybean supply projections for 2020-21 include a smaller harvested area, lower beginning stocks, increased exports and lower ending stocks.

Soybean production was forecast at 4.27 billion bushels, which would be the fourth-largest soybean crop on record. Harvested area was reduced to 82.3 million acres, but the forecast yield would tie a record high of 51.9 bushels per acre. If realized, the forecast yield will be a record high in Indiana, Kentucky, Minnesota, Missouri, Ohio, Pennsylvania, Texas and Wisconsin.

The U.S. season-average soybean price received by producers for 2020-21 was estimated at $9.80 per bushel, up 55 cents from last month’s forecast and about $1.23 more than the 2019-20 average. The projected soybean meal price was raised $20 from last month to $335 per ton, which would be $35.50 more than the 2019-20 average.

  • Hay: With the hay harvest winding down, the USDA estimated the 2020 alfalfa and alfalfa mixture dry crop at 52.6 million tons, down 4% from 2019. Based on condition as of Oct. 1, yields are expected to average 3.22 tons per acre, 0.06 ton from last year. Harvested area is forecast at 16.4 million acres, down 2% from 2019. Record-high yields are forecast in Arizona, Idaho and Oregon.

Production of other hay is forecast at 75.1 million tons, up 1% from 2019. The U.S. yield is expected to average 2.08 tons per acre, up 0.01 ton from last year. If realized, this yield would represent the second-highest yield on record. Harvested area is forecast at 36 million acres, up 1% from 2019. Record-high yields are expected in Alabama, California, Georgia, Idaho, Iowa, Kentucky and Wyoming.

For more 2020 U.S. hay production details, read 2020 dry hay harvest a mixed bag in Progressive Forage.

  • Cottonseed: Although acreage estimates were unchanged from last month, the cotton production outlook was reduced. As a result, the 2020 cottonseed crop was estimated at 5.21 million tons, down 732,000 tons (12%) from 2019. If realized, it would be the smallest cottonseed harvest since 2015.  end mark
Dave Natzke