Wednesday, December 30, 2009

Fortune Telling from DC

For what its worth:

Slightly Less Milk Production and Firm Global Demand Combine To
Raise 2010’s Milk Price Forecast
Feed costs have fallen substantially in 2009, but are unlikely to fall as much next
year. The benchmark 16-percent protein ration value is projected to average in the
mid-$7.00 per cwt range this year compared with over $9.00 per cwt in 2008. In
2010, the price should continue to fall, but not by nearly as much. Falling soybean
meal prices will constitute a large share of the drop. Corn prices for the 2009/10
crop year are forecast to decline to $3.25 to $3.85 per bushel compared with the
2008/09 crop year average of $4.06 per bushel. Soybean meal prices are forecast to
decline from $331 per ton average in 2009/10 to a forecast $260, with $310 per ton
in 2010/11.
The U.S. dairy herd is forecast to continue to contract in 2010, with most of the
herd reduction coming in early 2010 and attenuating later in the year. The U.S.
dairy herd is expected to average 8.97 million next year and is expected to average
below 9 million cows in each of the four quarters of 2010. The forecast decline in
herd size will represent a 2.5-percent decline year-over-year. This decline follows a
1.3-percent decline in 2009. In contrast, milk production per cow is forecast to rise
to 20,950 pounds, a 1.84-percent year-over-year increase and slightly ahead of the
5-year-trend increase. In light of lower feed prices and improving milk prices, the
short-term response is to produce more milk per cow as rations are improved. This
will occur before producers undertake any herd expansion, which requires
investment in livestock.
Commercial disappearance is forecast to rise by less than half-a-percent next year
on a fat basis and to be virtually unchanged from 2009 on a skims-solids basis.
World markets remain firm, and the export forecast remains unchanged from last
month. Product exports are projected to continue to rise next year, especially for
nonfat dry milk (NDM) and whey products. Exports of NDM will help draw down
stocks next year on a skims-solids basis, but stocks on a fats basis will be drawn
down less. Imports are forecast to decline slightly next year on a fats basis but to
rise slightly on a skims-solids basis.
Product prices across the board will be higher next year. Cheese prices will likely
average $1.290 to $1.300 per pound in 2009 and rise to average $1.615 to $1.695
per pound in 2010. Butter prices are projected to average $1.195 to $1.225 per
pound and average $1.430 to $1.540 per pound next year. After averaging 91.0 to
93.0 cents per pound this year, NDM prices are forecast to climb to average $1.245
to $1.305 per pound in 2010. Whey prices are projected to average 25.5 to 26.5
cents per pound in 2009 and rise to 35.0 to 38.0 cents per pound next year.
The higher price prospects for dairy products both this year and next will boost milk
prices as well. After averaging $11.30 to $11.40 per cwt in 2009, Class III prices
are forecast to rise to average $15.15 to $15.95 per cwt next year. Likewise, Class
IV prices are expected to climb from $10.75 to $10.95 in the current year to average
$14.60 to $15.50 per cwt in 2010. The all milk price is expected to average $12.70
to $12.80 this year and rise to average $16.35 to $17.15 in 2010.


  1. The part that is forgotten is that some folks still produce there own feed and the cost of doing that has not been cheap recently. So those are still the working cost 1-2 years later which does not change our costs as fast as sitting a at desk and using todays market prices. Someone producer somewhere whether it is a dairyman or a crop producer is getting the shortend of the stick.

  2. I for one "hope" that the price predictions are at least what is quoted above, more would be better, less also remains possible.
    As in the bottom of Pandora's box, all we may have left is hope? I think the saying is "hope springs eternal". Which I believe means we can never lose it, hope that is. Maybe we are just "living on hope"? "Hope" that the milk price will increase to a level so bills can be paid and critters cared for in a proper manner. Some days "hope" is all we have to keep us going and we try to sustain ourselves as we believe that somehow our "hope" will improve our lot.
    But someday reality will have to set in and we'll have to realize that all our hope is in fact "hopeless". Reality always trumps hope. Hope should be used only for things we can't control. But milk prices, at least in theory, should be within our control. However we can't rely on hope in place of action. Perhaps the thought of meaningful action by dairy farmers is also just hopeful thinking, or maybe it's hopeless?
    I hope you all understand, and I hope next year will be better than this one was.