cameron s. thraen osue dairy economist
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Cameron S. ThraenOSUE Dairy Economist
DairyDairyMarketMarketOutlookOutlook
Prepared for the 2003 Midwest, Great Plains, and Western Outlook Conference
August 14,15 Indianapolis, IN
2003 - 2004 Policy & Outlook Program2
Charles Dickens on the U.S. Dairy Economy…
“It was the best of times, it was the worst of times,
It was the spring of hope, it was the winter of despair”.
Tale of Two Cities, Charles Dickens
2003 - 2004 Policy & Outlook Program3
A Dickens Economy…U.S. All Milk Price $/cwt
Cash Income from sale of milk
Percent Change
1999 $14.35 $23.3 b AMP / C$
2000 $12.44 $20.7 b -13.6% / -11%
2001* $15.05 $24.9 b +21.4% / +19.9%
2002* $12.11 $20.5 b -19.5% / -17.46%
2003* $11.85 $20.1 b -2.1% /
-1.9%
*Does not include MILC payments
2003 - 2004 Policy & Outlook Program4
20 State Cows and Yields Turn Down… finally
2003 - 2004 Policy & Outlook Program5
Total U.S. milk productionslows its growth rate…
2003 - 2004 Policy & Outlook Program6
Margins drive expansion…
2003 - 2004 Policy & Outlook Program7
Regional Milk Production Trends…
West (CA, ID, NM, WA, TX) Upper Midwest (WI, MN) North East (NY, VT) North Central (OH, MI, PA) Midcentral (IA, IL, IN)
2003 - 2004 Policy & Outlook Program8
Cows in the West…
2003 - 2004 Policy & Outlook Program9
Yields in the West…
2003 - 2004 Policy & Outlook Program10
Cows in the UMW…
2003 - 2004 Policy & Outlook Program11
Yields in the UMW…
2003 - 2004 Policy & Outlook Program12
Cows in the NE…
2003 - 2004 Policy & Outlook Program13
Yields in the NE…
2003 - 2004 Policy & Outlook Program14
Cows in the NC…
2003 - 2004 Policy & Outlook Program15
Yields in the NC…
2003 - 2004 Policy & Outlook Program16
Cows in the MC…
2003 - 2004 Policy & Outlook Program17
Yields in the MC…
2003 - 2004 Policy & Outlook Program18
Big West vs. Big East…
2003 - 2004 Policy & Outlook Program19
Use, Inventories and all that jazz…• Commercial Disappearance (MF)
• Stocks to Production Ratios– Butter and Cheese
• U.S. All Milk Price
2003 - 2004 Policy & Outlook Program20
Commercial Disappearance in all products (milkfat basis)…
Source: USDA/ERS/AMS
2003 - 2004 Policy & Outlook Program21
Butter Stocks to Production Ratio
2003 - 2004 Policy & Outlook Program22
Keeps Lid on NASS Butter Prices…
2003 - 2004 Policy & Outlook Program23
Cheese Stocks to Production Ratio
2003 - 2004 Policy & Outlook Program24
Not a limit to NASS Cheese Prices…
2003 - 2004 Policy & Outlook Program25
Milk Supply & Demand Summary (mf basis)1998 1999 2000 2001
Milk Cows – U.S.1,000’s 9,154 9,156 9,206 9,115
Milk / cow 17,189 17,771 18,202 18,139Total Milk-B Lbs. 157.3 162.7 167.5 165.3
Marketings- B Lbs. 156.0 161.3 166.2 164.0
Beg. Stocks- B Lbs. 4.9 5.3 6.1 6.8
Imports- B Lbs. 4.5 4.8 4.4 5.7
Total Supply- B Lbs. 165.4 171.4 176.7 176.6
End Stocks- B Lbs. 5.3 6.1 6.8 7.0
Net removals- B Lbs.Net removals- B Lbs.
0.4(3.9
skim)
0.3(6.4
skim)
0.8(8.6
skim)
0.2(5.8
skim)CommercialDisappearance 159.7 165.0 169.1 169.4
Source: USDA/ERS LDPSource: USDA/ERS/AMS
2003 - 2004 Policy & Outlook Program26
Milk Supply & Demand Summary (mf basis)
2002 2003:Q1 2003:Q2 2003Milk Cows – U.S.1,000’s 9,141 9,135 9,126 9,120
Milk / cow 18,573 4,525 4,720 18,760Total Milk-B Lbs. 169.8 41,335 43,000 171.1
Marketings- B Lbs. 168.5 41,000 42,700 169.8
Beg. Stocks- B Lbs. 7.0 8.9 9.2 8.9
Imports- B Lbs. 4.8 1.2 1.2 4.8
Total Supply- B Lbs. 180.3 51.1 53.1 183.5
End Stocks- B Lbs. 8.9 9.2 9.6 7.0
Net removals- B Lbs.Net removals- B Lbs.
0.2(5.8
skim)
0.1(2.5
skim)
0.1(2.5
skim)
0.2(6.0
skim)CommercialDisappearance 171.2 41.0 42.5 173.8
Source: USDA/ERS LDPSource: CsT / OSUE
2003 - 2004 Policy & Outlook Program27
2003 – 2004 Price Forecast
• Review Handouts on Milk Price Update• Will the current price rally in the CME cash cheese
be sustained?• Butter inventories do not forecast a similar rise in
cash butter prices.
2003 - 2004 Policy & Outlook Program28
Forecasts? Sure I got that…
2003 - 2004 Policy & Outlook Program29
Dairy Commodity Prices ‘03
2003 - 2004 Policy & Outlook Program30
2003 Milk Component Prices
2003 - 2004 Policy & Outlook Program31
Dairy Commodity Prices ‘04
2003 - 2004 Policy & Outlook Program32
2004 Milk Component Prices
2003 - 2004 Policy & Outlook Program33
Class III CME Settle Prices
2003 - 2004 Policy & Outlook Program34
Dairy Market & Policy Challenges Ahead…
MILC… who’s got the MILC $$’s Higher milk prices a welcome relief !! $1.670 billion through August 7, 2003 Higher market prices may take the heat
off…?
2003 - 2004 Policy & Outlook Program35
MILC Numbers Selected States
2003 - 2004 Policy & Outlook Program36
Dairy Market & Policy Challenges Ahead…
Import of Milk Proteins (HR1160 / S560)
2003 - 2004 Policy & Outlook Program37
Cam ThraenCam Thraen(614) 292-2702(614) 292-2702
Thraen.1@osu.eduAede.osu.edu/programs/ohiodairy/Aede.osu.edu/programs/ohiodairy/
2003 - 2004 Policy & Outlook Program38
Casein & Caseinates…
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