1 2014-2015 agricultural policy and outlook conference series cameron thraen, osu-aede extension...
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12014-2015 Agricultural Policy and Outlook Conference Series
Cameron Thraen, OSU-AEDE Extension State Specialist
Dairy Markets & Policy
Website @ AEDE/OSU: http://aede.osu.edu/research/ohio-dairy-web
US. Markets and Prices 2015
U.S. Dairy Export Markets
Today’s Topics
U.S. Dairy Safety Net Policy
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Ohio dairy numbers…
2013 Wayne Holmes Knox Ashland
Lic Farms (a/m) 233 (162) 292 (133) 45 (26) 58 (75)
Milk Cows 32,500 17,000 3,500 6,000
County Rank 1 3 22 13
Source: Ohio Dept. Agric. Statistics
Allocated revenue is the return to capital and management. Estimate Thraen
Average number of cows per dairy farm: 61 cows 2001 & 96 cows 2014Average production per dairy farm:1.0m #’s 2001 & 1.9m #’s 2014Allocated Revenue per cow estimate*: ~$1,400{2007: $1,240.00 / 2009: $70.00}
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Ohio dairy numbers…
Source: Ohio Dept. Agric. Statistics
Ohio Milk Cows ~ 267,000 Total Milk Production 2014 ~ 5.4 billion pounds
Gross Cash Revenue for Sale of Milk ~ $1.3 billion
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Notable Trends: U.S. total milk cow numbers edge up to 9.285 million head.
U.S. total milk production continues long run expansion reaching over 204 billion pounds in 2014.
U.S. milk production per cow continues steady upward trend to 22,178 # in 2014, .
Milk Cows & Production: U.S.
Data source: http://www.ers.usda.gov/data-products/
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Regional Comparisons.
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Regional Comparisons.
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CHEESE+13% from 2000
• Italian cheeses 15# pc
• Cheddar 9# pc
MILK BEVERAGES-10% from 2000
• Fluid Milk & Cream• 175# pc
OTHER DAIRY
• Ice Cream• 18# pc
• Yogurt• 15# pc
Commercial Use
Source : FMMO 32 Central Marketing Service Bulletin 10/14.
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Demand Trends
Consumer interest in dairy products lies with Cheese, primarily Cheddar and Italian types and with Yogurt. Beverage milk products continue a long downward slide despite promotion efforts. Perhaps a new strategy is in order?Source : FMMO 32 Central Marketing Service Bulletin 10/14.
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U.S. Dairy Trade
Whey
Cheese
LactoseWMP
NDM/SMP
U.S. Dairy Export Council http://www.usdec.org
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U.S. Dairy Trade MT and $
U.S. Dairy Export Council – Global Dairy Market Outlook 2014 http://www.usdec.org
Exports growth slows in 2014 on strong U.S butterfat and lactose prices.
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Exports climb from less than 4% in 1996 to over 15% of U.S. milk production in 2014. Imports shrink to less than 3%.
Source: U.S. Dairy Export Council USDEC
U.S. Dairy Export Trade
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U.S. Dairy Trade 2014
U.S. Dairy Export Council – Global Dairy Market Outlook 2013 http://www.usdec.org
U.S. Exports fall to lowest level in 19 months increased supplies in Europe and Oceana Russia imposes ban on imports from Europe China slows imports in last half of 2014
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Dairy Exports
All Products
% of U.S. ProductionUsed in Export
Days of U.S. ProductionExported
ExportEquivalent number of cows (000)
U.S. All Milk Price($ cwt)
1997 4.5 16.4 416 13.34
2003 5.7 20.8 518 12.52
2007 9.5 34.6 873 19.13
2014 15.9 58.0 1,480 ~24.00
Importance of U.S. Dairy Trade
U.S. milk production increased 34 billion pounds from 2003 – 2014. U.S. exports increased by 25.7 billion pounds absorbing 75% of the growth in U.S. milk production.
Data source: http://www.ers.usda.gov/data-products/
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Global Price Index 10 years history
Global Dairy Trade 11-18
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Global Dairy Trade 11-18
Trade Product Price Performance
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Danger on the Export Horizon
Strong U.S. dollar and high U.S. dairy product prices could bring storms to the U.S. Export market in 2015 !
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U.S. Dairy Trade 2014
U.S. Dairy Export Council – Global Dairy Market Outlook 2014 http://www.usdec.org
U.S. Exports Value continues to increase $5.6 billion dollars in 2014. Up 14% over 2013. Most products show year to
date increases in volume exported.
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U.S. a Trusted Supplier
Westernization of diets Market penetration of international chains
McDonald’s(18k) KFC(12k) Subway(10k) Pizza Hut(6k) Starbucks(6k)
Rising middle class and income Majority of the world economies now are lower to upper income.
Growth of restaurants as social centers Growth in consumption of proteins
Switch from grain to livestock based
Demand for safe food and high quality
Positive Trends that will continue:
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C3 and C4 2015 Projection
CME forecast for C3 and C4 Milk in 2015 falls from 2014 highs.
Lower butterfat and protein
prices on the way in 2015
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U.S. All Milk Price 2015
Forecast for U.S. All Milk Price in 2015 falls from 2014 highs.
U.S. All Milk Price expected
to soften in 2015
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U.S. All Milk Price 2015
Lower Feed Input costs in 2015 coupled with a reduction in U.S. All Milk Price will keep IOFC margin strong for 2015.
Risk Management for U.S. Dairy Research & Extension education efforts
supported by the following:
The following USDA funding grant is acknowledged:USDA-AMS Cooperative Agreement: Risk Management in the U.S. Dairy Industry
USDA-NIFA Award No. 2012-49200-20032
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www.dairymarkets.org/mpp
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The Basic Design of MPP-DairyRegistration(CCC-781) and Coverage Election (CCC-782)
1. Establish the operation’s production history PH
2. Producers selecta) Coverage Level Threshold - $4 to $8 in 50¢ increments
b) Coverage Level Percentage – 25% to 90% of production history
3. One coverage level on all eligible milk
4. Change annually (within year termination only in case of death, retirement, dissolution)
5. Benefits calculated 6 times each year and paid on 1/6th of PH.
6. 2015 THE LAST DAY TO FILE WITH THE FSA DECEMBER 05 !
MPP Safety Net Program
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MPP Premium Rates
$4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$0
.00
$0
.01
$0
.03
$0
.04
$0
.06
$0
.09
$0
.22
$0
.30
$0
.48
$0
.00
$0
.02
$0
.04
$0
.10
$0
.16
$0
.29
$0
.83 $1
.06 $1
.36
Premium Rates
First 4 M lbs PH After 4 M lbs PH
FREE
Tier 1: First 4M #s / Tier 2: After 4M #s
$6.50 to $7.00 coverage has $0.54 increase in Tier 2
premium
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IOFC 2015 Projection
Margin forecast remains strong in 2015 and above the long term U.S. average of $8.35.
2015 planning IOFC margin
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Closing Thoughts for 2015
Lagged U.S. milk production response to record equity buildup in 2014…
Renewed concerns of general economic weakness outside the U.S….
End of dairy quota in Europe… Long term impact from Russia’s dairy import
ban…How will these events translate into a lower U.S. All Milk price? Will U.S. grain and soybean meal prices remain low in 2015?
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Cameron Thraen, OSU-AEDE Extension State Specialist
Dairy Markets & Policy
Website @ AEDE/OSU: http://aede.osu.edu/research/ohio-dairy-web
US. Markets and Prices 2015
U.S. Dairy Export Markets
Today’s Topics
U.S. Dairy Safety Net Policy