Released on March. 9, the WASDE report revised the 2022 milk production estimate down 1.2 billion pounds from last month’s forecast to 226 billion pounds. If realized, 2022 production would be down 300 million pounds (0.1%) from the 2021 production of 226.3 billion pounds. The reduction was based on lower dairy cow numbers and slower growth in milk per cow.
Price forecasts for cheese, butter, nonfat dry milk and whey were raised from last month based on current strong prices, lower expected production and continued demand strength.
For 2022, the projected Class III milk price was raised 35 cents from last month’s estimate to $20.65 per hundredweight (cwt). That would be up $4.57 (27%) from the 2021 average of $17.08 per cwt.
The projected annual average Class IV price was raised another $1.40 to $23.70 per cwt, up $7.61 (47%) from the 2021 average of $16.09 per cwt.
The projected all-milk price for 2022 was raised to $25.05 per cwt, up $1.50 from last month’s forecast and up $6.36 (34%) from the 2021 average of $18.69 per cwt.
Beef production, price estimates raised
The beef production estimate was raised from the previous month on higher fed and non-fed cattle slaughter. Fed cattle prices were raised on firm packer demand and declining inventories of fed cattle. The USDA estimated 2022 annual average prices for fed cattle at about $139.50 per cwt, $17 more than the 2021 average of $122.40 per cwt.
Corn, soybean and meal prices higher
The WASDE report also provided feed supply and demand estimates and cost projections:
- Corn: This month’s 2021-22 U.S. corn outlook increased food, seed and industrial use and raised exports, resulting in smaller stocks relative to last month. At $5.65 per bushel, the projected season-average corn price received by producers was raised 20 cents from last month. That would be about $1.12 (25%) more than 2020-21 average of $4.53 per bushel and $2.09 (59%) more than the 2019-20 average of $3.56 per bushel.
- Soybeans: The 2021-22 U.S. soybean supply and use outlook projected higher exports and lower ending stocks compared with last month’s report. The U.S. season-average soybean price for 2021-22 is forecast at $13.25 per bushel, up 40 cents from last month and $2.45 (23%) more than the average for 2020-21. The soybean meal price was projected at $420 per short ton, up $10 from last month and nearly $28 (7%) more than the average for 2020-21.
Rabobank sees similar global trends
Separately, Rabobank released its Global Dairy Quarterly report, indicating persistently unfavorable weather in the Southern hemisphere, along with high and rising production costs, will lead to a year-over-year milk production decline during the first half of 2022 in the seven largest dairy exporting regions of the world.
Rabobank noted that farmgate milk prices have increased significantly across the major export regions, with potential for further upside in milk prices ahead. Poor forage quality is negatively impacting milk yields in the European Union and U.S., and milk producers around the globe are facing higher corn and soybean prices for the next two years.
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