The USDA Monthly Report on World Agricultural Supply and Demand Estimates (WASDE), released on April 8, revised the estimate of U.S. milk production for 2022 upwards, citing expected growth in cow numbers. Despite the increase in production, the outlook for farm-level milk prices has improved.
From last month, the USDA raised the milk production forecast by 300 million pounds to 226.3 billion pounds. If achieved, 2022 production would be unchanged from 2021.
Price forecasts for cheese and butter were raised from the previous month due to tighter stocks and firm demand. Skim milk powder prices were raised slightly, while whey prices were lowered as US prices are expected to become competitive with international prices.
With higher cheese prices more than offsetting lower whey prices, the projected annual average price for Class III rose $1.10 from last month to $22.75 per cwt (cwt). The Class IV projected price was increased by 35 cents to $24.05 per cwt. The milk price forecast for 2022 has been raised to $25.80 a quintal, up 75 cents from last month.
Looking at other WASDE report components:
- Beef production prospects improved. The 2022 beef production estimate was raised from the previous month due to higher placements expected in the first quarter, which supports higher slaughter of fed cattle, and more unfed cattle slaughter is expected. expected. Expected feeder cattle prices are unchanged from last month. The USDA has estimated 2022 annual average prices for fed cattle at about $139.50 per cwt, $17 higher than the 2021 average of $122.40 per cwt.
- Corn price forecasts have increased: This month’s 2021-22 U.S. corn outlook forecast offsetting changes in feed and residual use and corn used for ethanol production, with ending stocks unchanged. At $5.80 a bushel, the season’s average expected price of corn received by growers was up 15 cents from last month. That would be about $1.27 (28%) higher than the 2020-21 average of $4.53 per bushel and $2.24 (63%) higher than the 2019-20 average of $3.56 per bushel .
- Soybeans, flour prices unchanged: The U.S. soybean supply and disposition outlook for 2021-22 called for higher seed exports and utilization and lower ending stocks. The average US soybean season price received by growers for 2021-22 was forecast at $13.25 per bushel, unchanged from last month, but $2.45 (23%) higher than the 2020 average. -2021 and $4.68 (55%) higher than the 2019-20 average of $8.57. The price of soybean meal was forecast at $420 per short ton, also unchanged from last month, but nearly $28 (7%) higher than the 2020-21 average and $120.50 (40%) higher than the 2019-20 average.
The last Global Dairy Trade Auction (GDT) saw the overall index decline slightly with mixed commodity prices. By category, the prizes were:
- Skim milk powder rose 1% to $4,599 per metric ton (MT, or about 2,205 pounds).
- Whole milk powder fell 1.5% to $4,532 per metric ton.
- Butter fell 0.6% to $6,891 per metric ton.
- Cheddar cheese rose 2.7% to $6,472 per metric ton.
- Anhydrous milkfat fell 2.5% to $6,908 per MT.
The GDT platform offers dairy products from six global companies: Fonterra (New Zealand), Dairy America (USA), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland). The next GDT auction will take place on April 19.
The financial outlook for U.S. agricultural producers fell to a 22-month low in March, weighed down by the economic impacts of the ongoing military conflict in Ukraine and ongoing supply chain challenges. The decline was driven by both weaker perceptions of current conditions and expectations for the future, as measured in the monthly report Purdue University/CME Group Ag Economy Barometer Survey.
“As producers reflect on their farm’s financial situation in 2022, it’s clear that they don’t expect strong commodity prices to offset the dramatic rise in farm production costs they are experiencing. said James Mintert, principal investigator of the barometer and principal of Purdue University. Center for Commercial Agriculture.
The Farm Economy Barometer provides a monthly snapshot of farmers’ sentiment regarding the state of the farm economy. The survey collects responses from 400 producers whose annual market value of production is equal to or greater than $500,000. The minimum targets per company are: 53% corn/soy, 14% wheat, 3% cotton, 19% beef cattle, 5% dairy and 6% pork. The latest survey results, released on April 5, reflect the outlook for agricultural producers from March 14-18.
The March survey provided the first opportunity to explicitly ask producers how they expect the war in Ukraine to impact US agriculture. Producers overwhelmingly said they expect input prices to be the most affected (63% of respondents), followed by crop prices (33% of respondents) and livestock prices (3% of respondents).
Asked about their expectations for agricultural input prices in the coming year, 57% of producers said they expected agricultural input prices to increase by 20% or more and 36% said they thought input prices would increase by 30% or more. In response to a related question, just over a quarter (27%) of producers say they have had difficulty purchasing agricultural inputs for the 2022 agricultural season.
Producers consider that now is not the right time to make big investments, with plans to buy farm machinery and build farm buildings and grain silos both lower than previous surveys. Supply chain issues continue to haunt both agricultural machinery and construction investment.
Find an audio podcast discussion on the Agricultural Economics Barometer here.