US expects strong corn, soybean yield with ‘positive’ milk over feed margins
US dairy producers may be in for favorable margins through the rest of 2024 thanks to strong milk prices and lower feed costs, according to Ever.Ag analysts.
Class III milk prices remain in the $20 range, with Class I and Class II both above $20. At the same time, strong corn and soybean production coupled with greater exports may continue the downward push on these commodity prices.
“Overall, we're in this position where feed costs are looking to be fairly low or could be fairly low as we go through the rest of this year,” explained Ever.Ag commodity broker Bryce Windecker. “And on the flip side, milk prices are pretty high. It’s been a long time since we’ve talked about the forward margin looking pretty positive.
“But with that in mind, I’d caution that when we have high margins, it tends to bring out a little bit more milk, and what comes up must come down. But milk over feed margins do look very positive today.”
Strong corn and soybean yields ‘pretty likely’
Kathleen Noble-Woofley explained that corn markets had come under pressure in the last several months, with December corn trading sub-$4 per bushel. “If realized, that would be the first time we’ve seen sub-$4 corn since 2020,” she said. “It looks like there should be some relief on the way as we think about feed prices.”
Windecker added that a lot of grain producers sellers had not yet forward-contracted, suggesting there will be good buying opportunity as harvest time approaches ‘because the grain farmer is going to have a good crop coming out of the field, and last year’s crop is still in the bin’. “That's going to help play right into the hands of a feed buyer,” he explained.
On yield, Noble-Woofley said that the average US corn crop rating for good to excellent conditions is near the top-end of the five-year average range. “Across Indiana, Illinois, Iowa, Missouri even, the corn crop looks pretty stellar as compared to the five-year average,” the commodity broker said. “It does seem pretty likely that at this point we're going to have some pretty good yields on corn here in 2024.”
WASDE report highlights for dairy
The milk production forecasts for 2024 and 2025 are lowered along with cow inventories and output per-cow.
Higher expected shipments for of butter and milkfat lift 2024 fat-basis export forecast for 2024 but not 2025.
Fat and skim-solids bases imports for 2024 are reduced from last month; for 2025, imports are raised on both a fat basis and skim-solids basis.
Price forecasts for 2024 cheese, NDM and whey are raised on price strength; butter is lowered.
Class III, IV are both raised and the all milk price is raised to $22.30 per cwt for 2024.
For 2025, price forecasts for cheese, butter, NDM and whey are all raised, with Class III and IV price forecasts both raised as a result and the all milk price up to $22.75 per cwt.
According to the latest USDA World Agricultural Supply and Demand Estimates report, this month’s 2024/25 corn outlook is for larger supplies, lower domestic use, greater exports and smaller ending stocks. Production is forecast to increase by 47 million bushels from last month thanks to an increase in yield. Corn use for 2024/25 is forecast to increase by 60 million bushels and exports to raise 75 million bushels thanks to low world market prices and US competitiveness.
As for soybeans, production for 2024/25 is also forecast to increase, up 154 million on higher area and yield. Supplies are projected to be 11% higher than last year and exports – 25 million bushels higher thanks to higher supplies.
Global soybean production is up 6.9 million tons on higher production from the US, Ukraine, Russia, India and Benin, and exports are also up 1 million tons on higher exports from the same countries except India.
Reflecting on the US soybean situation, Noble-Woofley said: “It’s a familiar story on soybeans where in key growing regions outside the mid-Atlantic, conditions look pretty great. Indiana, Illinois, Iowa are doing pretty great, and the condition ratings are about 10 points above the five-year average. So it's been a pretty good season, whether we look at corn or soybeans.”
She continued: “Like corn, solid good-to-excellent ratings on soybeans historically could potentially, could likely mean strong yields at harvest. As we get some rain, that’s definitely helping those beans that were a little too dry, especially in the southeast. So that should really help us provide a good, healthy soybean crop to bring into these crushed plants to help our local meal markets.”
