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Outlook for the U.S. Dairy Sector in 2012

Outlook for the U.S. Dairy Sector in 2012. Milton Madison Farm Service Agency U.S. Department of Agriculture Presented at the 2012 USDA Outlook Forum Washington, D.C. February 24, 2012. Milk Production Increase Will Slow. Returns increased in 2011, leading to:

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Outlook for the U.S. Dairy Sector in 2012

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  1. Outlook for the U.S. Dairy Sector in 2012 Milton Madison Farm Service Agency U.S. Department of Agriculture Presented at the 2012 USDA Outlook Forum Washington, D.C. February 24, 2012

  2. Milk Production Increase Will Slow • Returns increased in 2011, leading to: • More cows starting off in 2012 • Higher productivity continues • 2011 Production: 196.2 billion pounds, up 1.8% • 2012 Production: 199.0 billion pounds, up 1.4%

  3. Replacement Cow Prices Staying Low With Ample Heifer Supplies

  4. Quarterly Average U.S. Cow Herd *Forecast

  5. Milk per Cow GrowthAdjusted for Leap Year *Forecast

  6. Quarterly Average Milk per Cow *Forecast

  7. Quarterly U.S. Milk Production Larger *Forecast

  8. Demand Growth Sluggish • Commercial Use Showing Slow Growth • Fat basis use less than 1 percent higher in 2011 • Skim solids basis use up 2 percent in 2011 • Support from commercial exports of skim milk products • No sales to CCC since 2009 • Commercial use in 2012 - 1 to 2 percent higher with lower prices

  9. Quarterly Domestic Use Increasing *Forecast

  10. Commercial StocksMilk Equivalent * * *Forecast

  11. CCC Net RemovalsMilk Equivalent *Forecast

  12. U.S. Dairy Exports Forecast Near Record Fiscal Year * Forecast

  13. U.S. Dairy Exports 2011

  14. Top Ten Destinations For U.S. Dairy Products ($ Million – Fiscal Year)

  15. 2012 Dairy Prices Lower • Class III price to average $16.70-$17.40 per cwt • Cheese price down 10 percent: $1.61-$1.68 per pound • Whey price up 18 percent: $0.615-$0.645 per pound • Class IV price to average $16.25-$17.05 per cwt • Butter price down 17 percent: $1.57-$1.67 per pound • Nonfat dry milk price down 8 percent : $1.36-$1.42 per pound • All milk price to average $18.00-$18.70 per cwt

  16. Class Prices *Forecast

  17. Quarterly Average Milk Prices *Forecast

  18. Retail Dairy Price Index *Forecast

  19. Milk Income Loss Contract Program Payments Expected In 2012 • Milk Income Loss Contract (MILC) payments likely for February production • Lower class I milk price • Expected higher feed costs • Final feed cost data available at the end of March • Payments also likely to be triggered for March through June production • MILC program payments are expected to total $180 million in 2012

  20. Farm Business Income Projection Lower for 2012 • Average net farm income per dairy farm was record high in 2011 $239,800 • Strong rebound from 2009 • 2010 income was $158,100 • Income for 2012 is expected to be 26 percent lower than 2011 at $175,000 • If realized, 2012 would be the third highest income year since 2007

  21. Additional Information on the 2012 Outlook is Available on the Following Websites: • World Agricultural Supply and Demand Estimates • www.usda.gov/oce/commodity/wasde/index.htm • Livestock, Dairy, and Poultry Situation and Outlook • www.ers.usda.gov/publications/ldp/ • Dairy: World Markets and Trade • www.fas.usda.gov/dlp/dairy/dairy.asp

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