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USDA raises 2022-23 milk price projections slightly

The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report, released Dec. 9, left the 2022 U.S. milk production estimate unchanged from last month’s forecast but boosted the 2023 production forecast slightly, with both higher expected cow numbers and slightly more rapid growth in output per cow. All-milk price projections were raised for both years.

  • Compared to a month ago, the USDA kept the 2022 milk production forecast at 227 billion pounds. If realized, 2022 production would be up 700 million pounds (0.3%) from 2021 and up less than 1.7% from 2020.

For 2022, annual average price forecasts for butter and cheese were raised based on recent price strength and continued strong demand; nonfat dry milk (NDM) and whey price projections were unchanged.

Compared to a month ago, the projected 2022 annual average Class III price was raised 15 cents to $21.95 per hundredweight (cwt). The projected Class IV price was raised 20 cents to $24.50 per cwt. The 2022 all-milk price forecast was raised 15 cents from last month to $25.65 per cwt.

For 2023, the USDA projected milk production at 229.5 billion pounds, up 300 million pounds last month’s forecast. If realized, 2023 production would be up 1.1% from the 2022 estimate.

  • For 2023, the price forecasts for cheese and butter were raised as demand strength carries into the new year, but prices for NDM and whey were lowered on pressure from international markets. The projected Class III price was raised 15 cents to $19.80 per cwt, while the Class IV price forecast was cut 25 cents to $20.10 per cwt. The projected 2023 all-milk price was raised 10 cents to $22.70 per cwt.

Beef production, price outlook

The 2022 beef production estimate was raised with higher expected slaughter and heavier carcass weights. For 2023, the beef production forecast was unchanged.

Potentially affecting cull cow prices, the fed cattle price forecast for 2022 was unchanged from last month at $144.15 per cwt, nearly $22 higher than the 2021 average of $122.40 per cwt. Fourth-quarter 2022 prices were expected to average $152 per cwt.

The estimated 2023 annual average price for fed cattle was $156 per cwt, unchanged from last month’s forecast.

Feed price, production forecasts

The WASDE and Crop Production reports provided some updated feed supply and demand estimates and price projections:

  • Corn: This month’s 2022-23 U.S. corn outlook called for lower exports and greater ending stocks. At $6.70 per bushel, the projected season-average corn price received by producers was lowered 10 cents from last month’s forecast but is up 70 cents (12%) from the 2021-22 average of $6 per bushel and about $2.17 (48%) more than 2020-21 average of $4.53 per bushel.

  • Soybeans: The 2022-23 U.S. soybean supply and use outlook was unchanged from last month. The U.S. season-average soybean price received by producers for 2022-23 was forecast at $14 per bushel, unchanged from last month’s projections but still up 70 cents from 2021-22 and $3.20 more than the 2020-21 average.

The 2022-23 soybean meal price was projected at $410 per ton, up $10 from last month’s forecast but down about $30 (7%) from the $440 per ton average in 2021-22.

  • Hay: The USDA’s December Crop Production report did not provide an update on hay and forage harvests. For more on hay market conditions and prices, check out Progressive Forage’s Forage Market Insights update.

  • Cottonseed: Affecting cottonseed, this month’s 2022-23 U.S. cotton forecasts included higher production and ending stocks estimates. As a result, the cottonseed harvest was estimated at 4.323 million tons, up 63,000 tons from last month’s forecast but down 1 million tons (19%) from 2021. It would be the lowest cottonseed output since 2015.

Dave Natzke

December 9, 2022

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