1. 1 2014-2015 Agricultural Policy and Outlook Conference Series Cameron Thraen, OSU-AEDE Extension State Specialist Dairy Markets & Policy Website @ AEDE/OSU: 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

2. 2 2014-2015 Agricultural Policy and Outlook Conference Series Ohio dairy numbers… 2013WayneHolmesKnoxAshland Lic Farms (a/m)233 (162)292 (133)45 (26)58 (75) Milk Cows32,50017,0003,5006,000 County Rank132213 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 2014 Average production per dairy farm: 1.0m #’s 2001 & 1.9m #’s 2014 Allocated Revenue per cow estimate*: ~$1,400 {2007: $1,240.00 / 2009: $70.00}

3. 3 2014-2015 Agricultural Policy and Outlook Conference Series 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

4. 4 2014-2015 Agricultural Policy and Outlook Conference Series 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/

5. 5 2014-2015 Agricultural Policy and Outlook Conference Series Regional Comparisons.

6. 6 2014-2015 Agricultural Policy and Outlook Conference Series Regional Comparisons.

7. 7 2014-2015 Agricultural Policy and Outlook Conference Series Commercial Use Source : FMMO 32 Central Marketing Service Bulletin 10/14.

8. 8 2014-2015 Agricultural Policy and Outlook Conference Series 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.

9. 9 2014-2015 Agricultural Policy and Outlook Conference Series U.S. Dairy Trade U.S. Dairy Export Council http://www.usdec.org

10. 10 2014-2015 Agricultural Policy and Outlook Conference Series 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.

11. 11 2014-2015 Agricultural Policy and Outlook Conference Series 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

12. 12 2014-2015 Agricultural Policy and Outlook Conference Series U.S. Dairy Trade 2014 U.S. Dairy Export Council – Global Dairy Market Outlook 2013 http://www.usdec.org 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

13. 13 2014-2015 Agricultural Policy and Outlook Conference Series 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) 19974.516.441613.34 20035.720.851812.52 20079.534.687319.13 201415.958.01,480~24.00 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/

14. 14 2014-2015 Agricultural Policy and Outlook Conference Series Global Price Index 10 years history Global Dairy Trade 11-18

15. 15 2014-2015 Agricultural Policy and Outlook Conference Series Global Dairy Trade 11-18 Trade Product Price Performance

16. 16 2014-2015 Agricultural Policy and Outlook Conference Series 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 !

17. 17 2014-2015 Agricultural Policy and Outlook Conference Series U.S. Dairy Trade 2014 U.S. Dairy Export Council – Global Dairy Market Outlook 2014 http://www.usdec.org 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.

18. 18 2014-2015 Agricultural Policy and Outlook Conference Series U.S. a Trusted Supplier Positive Trends that will continue:

19. 19 2014-2015 Agricultural Policy and Outlook Conference Series 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

20. 20 2014-2015 Agricultural Policy and Outlook Conference Series 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

21. 21 2014-2015 Agricultural Policy and Outlook Conference Series 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.

22. 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 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

23. 23 2014-2015 Agricultural Policy and Outlook Conference Series www.dairymarkets.org/mpp

24. 24 2014-2015 Agricultural Policy and Outlook Conference Series The Basic Design of MPP-Dairy Registration (CCC-781) and Coverage Election (CCC-782) 1.Establish the operation’s production history PH 2.Producers select a)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 1/6 th of PH. 6.2015 THE LAST DAY TO FILE WITH THE FSA DECEMBER 05 ! MPP Safety Net Program

25. 25 2014-2015 Agricultural Policy and Outlook Conference Series MPP Premium Rates 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

26. 26 2014-2015 Agricultural Policy and Outlook Conference Series IOFC 2015 Projection Margin forecast remains strong in 2015 and above the long term U.S. average of $8.35. 2015 planning IOFC margin

27. 27 2014-2015 Agricultural Policy and Outlook Conference Series 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?

28. 28 2014-2015 Agricultural Policy and Outlook Conference Series Cameron Thraen, OSU-AEDE Extension State Specialist Dairy Markets & Policy Website @ AEDE/OSU: 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