Today’s Topics
U.S. Dairy Safety Net Policy
US. Markets and Prices 2015
U.S. Dairy Export Markets
Cameron Thraen, OSU-AEDE
Extension State Specialist
Dairy Markets & Policy
Website @ AEDE/OSU:
http://aede.osu.edu/research/ohio-dairy-web
2014-2015 Agricultural Policy and Outlook Conference Series
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Ohio dairy numbers…
Average number
of cows
per dairyKnox
farm:
Wayne
Holmes
Ashland
61 cows 2001 & 96 cows 2014
Lic Farms (a/m) 233 (162)
(133)
45 (26)
58 (75)
Average production per292
dairy
farm:
Milk Cows
32,500
6,000
1.0m #’s 2001
& 1.9m 17,000
#’s 2014 3,500
County Rank
1
22
13
Allocated Revenue
per3cow estimate*:
~$1,400
2013
Source: Ohio Dept. Agric. Statistics
{2007: $1,240.00 / 2009: $70.00}
Allocated revenue is the return to capital and management. Estimate Thraen
2014-2015 Agricultural Policy and Outlook Conference Series
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Ohio dairy numbers…
 Ohio Milk Cows ~ 267,000
 Total Milk Production 2014 ~ 5.4 billion pounds
Source: Ohio Dept. Agric. Statistics
 Gross Cash Revenue for Sale of Milk ~ $1.3 billion
2014-2015 Agricultural Policy and Outlook Conference Series
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Milk Cows & Production: U.S.
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,
.
2014-2015 Agricultural Policy and Outlook Conference Series
Data source: http://www.ers.usda.gov/data-products/
4
Regional Comparisons.
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Regional Comparisons.
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Commercial Use
CHEESE
+13% from 2000
MILK
BEVERAGES
-10% from 2000
OTHER DAIRY
• Italian cheeses 15# pc
• Cheddar 9# pc
• Fluid Milk & Cream
• 175# pc
• Ice Cream
• 18# pc
• Yogurt
• 15# pc
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
NDM/SMP
WMP
Cheese
Lactose
U.S. Dairy Export Council http://www.usdec.org
2014-2015 Agricultural Policy and Outlook Conference Series
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U.S. Dairy Trade MT and $
Exports growth slows in 2014 on strong U.S
butterfat and lactose prices.
U.S. Dairy Export Council – Global Dairy Market Outlook 2014 http://www.usdec.org
2014-2015 Agricultural Policy and Outlook Conference Series
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U.S. Dairy Export Trade
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
2014-2015 Agricultural Policy and Outlook Conference Series
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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
U.S. Dairy Export Council – Global Dairy Market Outlook 2013 http://www.usdec.org
2014-2015 Agricultural Policy and Outlook Conference Series
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Importance of U.S. Dairy Trade
Dairy
Exports
All
Products
% of U.S.
Production
Used in
Export
Days of
U.S.
Production
Exported
Export
Equivalent
number of
cows (000)
U.S. All
Milk Price
($ cwt)
1997
2003
2007
4.5
5.7
9.5
16.4
20.8
34.6
416
518
873
13.34
12.52
19.13
2014
15.9
58.0
1,480
~24.00
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/
2014-2015 Agricultural Policy and Outlook Conference Series
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Global Dairy Trade 11-18
Global Price Index 10 years history
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Global Dairy Trade 11-18
Trade Product Price Performance
2014-2015 Agricultural Policy and Outlook Conference Series
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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 !
2014-2015 Agricultural Policy and Outlook Conference Series
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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. Dairy Export Council – Global Dairy Market Outlook 2014 http://www.usdec.org
2014-2015 Agricultural Policy and Outlook Conference Series
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U.S. a Trusted Supplier
Positive Trends that will continue:
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C3 and C4 2015 Projection
Lower butterfat
and protein
prices on the
way in 2015
CME forecast for C3 and C4 Milk in 2015 falls from 2014
highs.
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U.S. All Milk Price 2015
U.S. All Milk
Price expected
to soften in 2015
Forecast for U.S. All Milk Price in 2015 falls from 2014 highs.
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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.
2014-2015 Agricultural Policy and Outlook Conference Series
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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
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MPP Safety Net Program
The Basic Design of MPP-Dairy
Registration(CCC-781) and Coverage Election (CCC-782)
1.
2.
Establish the operation’s production history PH
Producers select
a) Coverage Level Threshold - $4 to $8 in 50¢ increments
b) Coverage Level Percentage – 25% to 90% of production history
3.
4.
One coverage level on all eligible milk
Change annually (within year termination only in case of death,
5.
retirement, dissolution)
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 !
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MPP Premium Rates
$1.36
Premium Rates
$1.00
$0.01
$0.02
$0.03
$0.04
$0.04
$0.10
$0.06
$0.16
$0.09
$0.29
$0.22
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$0.60
$0.40
$0.20
$0.00
FREE
First 4 M lbs PH
$0.30
$0.00
$0.00
$0.80
$7.50
$0.48
$1.20
$6.50 to $7.00 coverage has $0.54
increase in Tier 2 premium
$0.83
$1.40
$1.06
$1.60
$8.00
After 4 M lbs PH
Tier 1: First 4M #s / Tier 2: After 4M #s
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IOFC 2015 Projection
2015 planning
IOFC margin
Margin forecast
remains strong in
2015 and above
the long term
U.S. average of
$8.35.
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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?
2014-2015 Agricultural Policy and Outlook Conference Series
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Today’s Topics
U.S. Dairy Safety Net Policy
US. Markets and Prices 2015
U.S. Dairy Export Markets
Cameron Thraen, OSU-AEDE
Extension State Specialist
Dairy Markets & Policy
Website @ AEDE/OSU:
http://aede.osu.edu/research/ohio-dairy-web
2014-2015 Agricultural Policy and Outlook Conference Series
28