1 2014-2015 Agricultural Policy and Outlook Conference Series Cameron Thraen, OSU-AEDE Extension...

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

http://aede.ag.ohio-state.edu/programs/OhioDairy/quickchart/daily_settle_prices_3_averages.htm


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}


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


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/


Regional Comparisons.


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.


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.


U.S. Dairy Trade

Whey

Cheese

LactoseWMP

NDM/SMP

U.S. Dairy Export Council http://www.usdec.org


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.


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


U.S. Dairy Trade 2014


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


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/


Global Price Index 10 years history

Global Dairy Trade 11-18


Global Dairy Trade 11-18

Trade Product Price Performance


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 !


U.S. Dairy Trade 2014


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.


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:


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


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


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


www.dairymarkets.org/mpp

http://www.dairymarkets.org/mpp


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


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


IOFC 2015 Projection

Margin forecast remains strong in 2015 and above the long term U.S. average of $8.35.

2015 planning IOFC margin


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?


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

http://aede.ag.ohio-state.edu/programs/OhioDairy/quickchart/daily_settle_prices_3_averages.htm

1 2014-2015 Agricultural Policy and Outlook Conference Series Cameron Thraen, OSU-AEDE Extension...

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