ahdb milk forecasting forum
TRANSCRIPT
AHDB milk forecasting forum
AHDB Market Intelligence
https://ahdb.org.uk/dairy-markets
1 September 2021
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The small print
Contents
• Key topics:
• Inseminations, calf numbers and herd structure
• Covid-19 update
• Calving patterns
• Feed update and impact on production
• Milk forecast
• 2022 peak milk production
• Compositional quality
Inseminations, calf numbers and herd structure
Inseminations• Estimates based on Genus monthly
figures adjusted by AHDB annual
survey results
• Figures show sales of straws – not
usage
• 12 months to Mar-21:
• 45% beef, 35% sorted, 20% dairy
• Sexed semen accounted for 64% of
dairy semen sales in year to Mar-21
• Shift to sexed was particularly
strong in second half of 2020
Expected dairy replacements• Estimates of the number of 0-6 month
old females based on insemination data
• Historically, actual number has been in line with projections
• But, from April 2020 actuals have been
above our estimate
• Conception rate improvements will
have helped drive this lift
• Insemination data suggests a
significant increase over the coming
year
• Does not necessarily lead to an
increase in the herd size – just a
reduction in the average age
Deadweight prices at record high
• Deadweight cow prices continue to
rise
• Currently 295p/kg
• Been above 290p/kg for 7 weeks
Quick calculation:
Rise in youngstock numbers
+ Rising feed costs
+ Record high cow prices
= Clear out time?
Age structure of the herd• Movement in herd by age group
• Overall annual drop in milking
herd at July was 1.9%
• Majority of decline has come
from the 4-6 year olds
• Big increase in youngstock
numbers
• 6% more 0-6 and 6-12 month
olds compared with July 2020
Retention rate
• Retention of cows over 6 month
period
• We seasonally adjust because
Oct always high and Apr always
low – allows us to see trends
easier
• Retention rates rose through
2020 but have flattened off in
2021
• Retention rates are higher for
younger animals
• Increase in proportion of
youngstock in the herd naturally
gives an increase in overall
average retention rate
Herd size expectation• AHDB projection of number of cows in
the GB dairy herd
• Based on predicted youngstock
numbers (from insemination data) and
3 year average retention rates
• Expectation that milking herd will be
around 1.64m by Jul 2022, down 0.8%
yoy
• Herd decline expected to flatten off due
to higher youngstock numbers
• Adjusted expectations following last
forum to include increased culling
levels – but rising youngstock numbers
keep pushing up the future herd
Calving patterns
Calf registrations by calving system
• Based on calf registrations with BCMS
• Groupings done based on:
• Block: 80% calvings in 4 month
window
• Dual block: 90% in 2 x 4 month
windows
• AYR: flat profile of calvings (+/-5%)
each month for 10, 11 or 12 months
• Non-defined: not included in above
• Suggests:
• 19.6% block calving
• 43.8% AYR
• 36.6% drop between definitions
Apparent lift in births to dairy dams
• Big lift in births registered in the
spring for 2021
• Jan-Jun 2021 births totalled 712k
head, up 26k head (4%) on the
five year average
• Shift in profile of calvings seen in
2020 continues in 2021
• Registrations of pure dairy male
calves fell by 8% (9k head) on
the year (article)
Contribution to monthly calvings
• Block calvers 19.6% of annual calf
registrations
• Peak months for block calving as % of
all registrations
• 37% in February
• 34% in March
• 30% in September
• 25% in August
Feed market update: where are prices heading?Megan Hesketh, Cereals & Oilseeds Analyst
01 September 2021
New crop UK prices following global wheat.
140
150
160
170
180
190
200
210
220
£ / t
on
ne
UK feed wheat Nov 21 Paris Milling wheat Dec 21 Chicago wheat Dec 21
Supply concerns - strengthening prices
Tightening global wheat
Canadian spring wheat crop
Russian wheat crop
US wheat crop
US maize
SA maize
Biofuel demand
Other factors to think about for
feed grains…
Where are ex-farm prices currently?
£202.30 £202.50 £203.20
£193.40
£201.30 £200.70 £200.10
80
100
120
140
160
180
200
220
240
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
£ / t
on
ne
2020/21-2021/22 ex-farm feed wheat price
10-yr range Average monthly ex-farm price 2021 10-yr average Average monthly ex-farm price 2020
UK cereals - 2021/22 S&D more balanced
1,265
1,045
253
792
169
345
1,624
803
343
461
158
273
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Wheat Total barley Winter barley Spring barley Oats Oilseed rape
Th
ou
sa
nd
he
cta
res
Provisional Arable area figures for England
Jun-19 Jun-20 Jun-21
• Winter cropping back
• Wheat area returning to normal levels
• Barley area down to previous levels
• Oats and pulses growing as OSR takes a back seat.
Harvest progress - to 24 August
3.3 – 3.5 t/ha
4.8 – 8.5 t/ha
5.7 – 6.1 t/ha
6.9 – 7.1 t/ha
8.0 - 8.4 t/ha46%
100%
26%
30%
92%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Winter wheat
Winter barley
Spring barley
Oats
Winter OSR
Barley supply vs. demand
4 4
4 6
4.22 5
-
1
2
3
4
5
6
7
8
9
2016 2018 2019 2020 2021* 5-yearaverage
Pro
du
cti
on
(m
illi
on
to
nn
es
)
UK barley production prospects not back as much as area
Winter Barley Spring Barley
Production down 13% year-on-
year, less than planted area due
to better yield prospects.
Source: Defra, AHDB, ADAS
*Estimate
Demand Supply
Exports to resume
Rebounding H&I demand
Feed ration usage
Winter yields above average
Winter area up
Where now?
Wheat Barley
• Global supply concerns – tight S&D
• Strong EU demand as competitive pricing.
• SA maize/feed grains may look tighter than expected.
• LT - neutral
• Demand to remain strong
• Discount to wheat remains strong
• Follow wheat up
• Capped gains through need to
remain competitive for exports.
NB – Price indicators based on current market dynamics.
Oilseeds – market drivers
Rapeseed - 2021/22 tight S&D for EU
Price of % of protein in meal
£6.74
£7.92
4
5
6
7
8
9
10
£ / t
on
ne
Cost by % of protein rapemeal (34%) Cost by % of protein soyameal (48%)
Where now?
Rapeseed
• Tight global supply – EU, Canada
• Strong crush margins/demand
• Continued pressure in the UK from
CSFB.
• Soyabeans/biofuel direction – LT neutral
NB – Price indicator based on current market dynamics.
Soyabeans
• US crops yields not yet known
• Some Chinese demand
• Biofuel mandates under question
• SA crops – La Niña?
Feed impact on milk production
Grass growth and silage
• Strong start to 2021 for grass
growth
• Fell back due to cold spell and
then extended dry period
• Strong growth since middle of
May
• Question is – how good is the
quality?
Silage quality
• Rapid drop off in ME and crude protein levels from mid-May, when growth rates increased
• Crude protein was down on 5-year average from March to June. Jumped up in July
• ME significantly below 5-year average in June and July
Feed prices
• Concentrate feed prices have
been rising steadily
• Based on average payments
recorded
• Straight prices used to extend
timeline
• Big increases expected, but
timing is questionable –
depends
Milk to feed price ratio• Historically we’ve seen drop in
milk production when MFPR
drops below 1.15
• Difference between calculated
and actual
• Feed costs typically account for
40% of cash costs
• Silage quantity seems to have
caught up, but quality
questionable
• Feed costs likely to be the main
challenge for remainder of the
year
Covid-19 update
Dairy retail consumption
• Big step up in retail sales across all dairy
categories in 2020
• Cooking from scratch helped butter, cream
and cheese
• Milk saw strong volume growth
• As a staple, dairy was expected to do well
in 2021, and is doing so
• Milk forecast to be up 6% v 2019, but
down slightly (0.1%) v 2020
• Retail sales expected to be lower than
exceptional 2020
• 2022 expected to be down against 2020
and 2021, but still up on the baseline year
(2019)
Consumption outlook
• Expect shift of consumption from retail to Out of Home (OOH) through 2021
• OOH still expected to be well below pre-pandemic levels (Covid cases, shifting
work patterns and lower consumer spending)
• Shift from retail to OOH could swing demand back to imports
Other key challenges
• Cardboard shortage
• Plastic/packaging cost increases
• Fuel price increases
• Labour availability – EU Exit and Covid impacts
• HGV drivers
• Processing staff
• Warehouse staff
• On-farm
Current milk forecast
National milk yields
• Currently use yield uplift of 2.3%
per annum in forecast
• Previous average was 1.5%, but
recent years have been at the
higher level
• Yields followed 2.3% projection
quite closely Jan-Jun 2021
• Closer to 1.5% line in July but both
projections are very close at that
time of year
• Lower July production potentially
an outlier due to weather
• Peak reached on 8 May at
37.96ml/day
• June forecast 12.58bn litres for
21/22, +0.3%
• Currently running below forecast
• Quickest drop from peak for at
least 10 years
• Last year’s drop was more gradual
because of spring curbing
• Production over most recent 2
months (14 Jun-14 Aug) was 23.6m
litres below what was forecast
GB milk production – June forecast 2021/22
GB milk production – June forecast 2022/23
• Current forecast goes through to
June 2022
• 3,365m litres for Apr-Jun 2022
would be 24m litres above
spring 2021
• September forecast (when
published) will take us through
to September 2022
Peak milk production
• Highest milk production day over
the last decade was 38.0ml on 23
April 2019
• Current forecast predicts 38.2ml
to be reached in May 2022
• Estimates put processing
capacity at 38.24ml pre-Covid
• However, we have seen capacity
increases mainly due to sites
expanding since then
3 year milk production forecast (March ‘21)
• Published before latest amendment to 2021/22
• 3 year forecast predicts 12.75bn by 2023/24 – that’s an extra 210m litres versus last year
• Driven by higher youngstock numbers, but smaller proportion expected to get into milking herd
• Drop in milking herd is <2% per annum versus yield rises of 2.3%
What will we do with the extra milk?
• With milk production expected to
rise, what will happen with the milk?
• Historically we’ve seen:
• Liquid share falling
• Cheddar share rising
• Yogurt share rising
• Milk trade increasing
• Expectations based on historic
trends and UK’s net importer status
• Will need assets on the ground to
deliver
Compositional quality
Latest butterfat vs forecast• Butterfat content was running
high in early 2021
• Above forecast so far this
season
• Starting to drop off in June-
July 2021
• Forecast based on
improvement trend over last 5
years
Latest protein vs forecast• Protein content was
consistently above forecast
April-June
• Latest defra data shows just
3.24% protein for July
• Lowest protein content since
July 2018 (3.21%)
• Forecast based on
improvement trend over last
5 years
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