Dairy Outlook 2013
Marin Bozic
North Dakota Dairy Convention
Mandan, ND November 6, 2012
Plan for today
1) Who is this guy and how do you pronounce
his name?
2) Taking a pulse of the U.S dairy sector
3) The Big Mac(ro): Why is U.S. GDP growth
so slow?
4) Long-term dairy dynamics: Global
5) Long-term dairy dynamics: Local
How do you pronounce ‘Marin’?
Dairy Food Marketing Economist
• Funded by dairy check-off
• Located at the University
of Minnesota, but covering
10-state area
• Research:
• Risk Management
• Price Analysis
• Consumer Insights
• Dairy Technology
Assessment
All-milk price: 2011-2012
$23.00
$22.00
$21.00
$20.00
$19.00
$18.00
$17.00
$16.00
$15.00
Milk Production: 2012 vs. 2011
Source: Daily Dairy Report
Weather Outlook
(Feb-Mar-Apr 2013)
Source: http://www.cpc.ncep.noaa.gov/products/predictions/90day/
Weather Outlook
May-Jun-Jul 2013
Year-to-Year Changes in U.S. Milk
Production
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
-1.00%
-2.00%
Year-to-Year Changes in Milk Per
Cow
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
-0.50%
-1.00%
Difference in U.S. vs. International
Cheese Prices
Is Inflation a Problem?
Growth vs. Deleveraging
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Income over Feed Costs Margin: 2004-2012
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
The Kiwi Cycle
(Change in Per Cow Milk Yield)
15.00
10.00
5.00
0.00
-5.00
-10.00
-15.00
New Zeland
USA
Source: http://www.cgd.ucar.edu/cas/catalog/climind/soi5.gif
The Bottom Line
1) High feed costs will keep milk production in
check. Exports may falter, providing additional
domestic supply.
2) Some chance drought may stay with us.
3) High volatility is the new normal, for several
years at least.
4) Tune-in after lunch for farm bill update
Dairy Outlook 2013
presented at the 2012 North Dakota Dairy
Convention
Dr. Marin Bozic
mbozic@umn.edu
Department of Applied Economics
University of Minnesota-Twin Cities
317c Ruttan Hall
1994 Buford Avenue
St Paul, MN 55108
You may download this presentation at
http://marinbozic.info/