agricultural price forecast update on impact of future growth in nevada dairies fallon, nevada may...
TRANSCRIPT
Agricultural Price Forecast
Update on Impact of Future Growth in Nevada DairiesFallon, NevadaMay 22, 2014
Michael [email protected]
University of Nevada, RenoUniversity Center for Economic Development
Meeting the Needs of the New Plant
10
20
30
40
50
250
500
750
1,000
1,250Dairy cows, ths (L)Dairy cows (WMP plant)Milk production, mil. lbs. (R )Production (WMP plant)
Nevada dairy
Sources: USDA, UCED
FAPRI Baseline
• Major factors in the outlook– Global economy, political environment– Global ag supply/demand balance– Agricultural policies – Energy needs and policies– Technology/productivity
Emerging Economies Drive Global Growth
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
-4
-2
0
2
4
6
8
10
World
Developed
Developing
Emerging
Sources: IFS, IHS Global Insight forecast
Real GDP, % change
Individual Markets Move Differently
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
40
60
80
100
120
140
WorldChinaMexicoEurozoneJapan
Sources: IFS, IHS Global Insight
Exchange rate index, 2005=100
Interest Rates Could Spur Investment
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
0
2
4
6
83-month T-billAAA corporate bond
Sources: IFS, IHS Global Insight forecast
Interest rates, %
Improved Supplies Ease Crop Prices
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
0
2
4
6
8
10
12
14
16
0
50
100
150
200
250
US Corn, $/bu (L)US Soybeans, $/bu (L)US Alfalfa, $/ton (R )
Sources: USDA, FAPRI
Milk Prices Will Reflect Feed Costs
12
14
16
18
20
22
2.75
3.00
3.25
3.50
3.75
4.00All milk, $/cwt (L)Retail, $/gal (R )
Sources: USDA, FAPRI-MU
U.S. milk prices
Growth Opportunity for Dairy Industry
20012002200320042005200620072008200920102011201220130
1,000
2,000
3,000
4,000
5,000
6,000ButterWhey & otherCheeseFluid
Source: International Trade Administration
U.S. dairy exports, $mil
Impacting the Nevada Price Outlook
• Major factors in the outlook for 2014– Continuing drought
• Water storage• Range and pasture conditions
– Hay acreage– Fallon WMP plant and dairy herd expansion– Fire season– California
Weather, WMP Plant Influence Hay Outlook
50
100
150
200
250
8
10
12
14
16Alfalfa hay, $/ton (L)Other hay, $/ton (L)Private grazing fees, $/AUM (R )
Nevada forage prices
Sources: USDA, UCED
Drought Reduces Irrigated Acres, Number of Cuttings
20002001200220032004200520062007200820092010201120122013100
125
150
175
200
225
250
275
300
Alfalfa
Other hay
Source: USDA
Nevada hay acreage, ths
California Losing Alfalfa Acres
20002001200220032004200520062007200820092010201120122013400
500
600
700
800
900
1,000
1,100
1,200
Alfalfa
Other hay
Source: USDA
California hay acreage, ths
Worst Start in Years
0
25
50
75
100
2010 2011 2012
2013 2014 2000-2010 avg
Nevada range condition, 0=Very Poor, 25=Poor, 50=Fair, 75=Good, 100=Excellent
Sources: USDA, UCED
Milk Prices Start High, Will Fall With Feed Costs
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
10
12
14
16
18
20
22CaliforniaNevadaU.S.
Source: USDA, FAPRI
All-milk price, $/cwt
Different End Use, Different Price
2011
2011
2011
2011
2012
2012
2012
2012
2013
2013
2013
2013
2014
-5
0
5
10
15
20
25
30
Class I (1)
Class IIIa (4a)
Difference
Source: Nevada Dairy Commission
Nevada milk price, $/cwt
Profitability Expected to Return in 2014
0
5
10
15
20
25
Other operating costs
Other feed costs
Purchased feed costs
Nevada dairy, $/cwt of milk sold
Sources: USDA, UCED
Meeting the Needs of the New Plant
10
20
30
40
50
250
500
750
1,000
1,250Dairy cows, ths (L)Dairy cows (WMP plant)Milk production, mil. lbs. (R )Production (WMP plant)
Nevada dairy
Sources: USDA, UCED
Wrap-Up: Mixed Bag• Global economy strengthening• Feed costs are declining• So far, milk prices are cooperating• California a major market for Nevada• Multi-year drought makes water shortage
more acute this year• Dairy demand will boost hay needs• Range conditions might not be adequate
Contact InformationThis presentation can be accessed on the University
Center for Economic Development website at:http://www.unr.edu/business/research-and-outreach/uced/food-and-agricultural-policy-research-institute-(fapri)
For more information or questions regarding this outlook please contact Mike Helmar at:[email protected]