2018 Milk Price Forecast Trimmed, While 2019 Forecast Is Raised

The following is from Lee Mielke, author of a dairy market column known as “Mielke Market Weekly.”

The Agriculture Department raised its 2018 and 2019 milk production estimates in the latest World Agricultural Supply and Demand Estimates report (WASDE), due to a more rapid pace of growth in milk per cow and increased cow numbers for 2019.

Production and marketings for 2018 were projected at 218.1 and 217.1 billion pounds, respectively, up 300 million pounds from last month’s estimates. If realized, 2018 production would be up 2.6 billion pounds, or 1.2 percent, from 2017.

Production and marketings for 2019 were estimated at 221.4 and 220.4 billion pounds, respectively, up 400 million pounds on both. If realized, 2019 production would be up 3.3 billion pounds, or 1.5 percent, from 2018.

Fat basis imports for 2018 and 2019 were raised on continued strength in butterfat imports and slightly higher cheese imports. The 2018 and 2019 skim-solids basis import forecasts were lowered from last month.

Exports on a fat basis were raised for 2018 on stronger cheese exports, but no change was made to the 2019 forecast. Skim-solids basis exports for 2018 were raised, primarily on stronger nonfat dry milk (NDM) and whey product shipments.

Butter and whey price forecasts for 2018 and 2019 were raised from the previous month on expected demand strength, but cheese price forecasts were lowered on continued large supplies. The NDM price forecast was unchanged.

The Class III milk price forecast was lowered for 2018; but higher 2019 whey prices are expected to more than offset declines in cheese prices, so the 2019 Class III milk price forecast was raised.

Look for the 2018 average to range $14.85 to $14.95 per hundredweight, down from the 2017 average of $16.17 and compares to $14.87 in 2016. The 2019 average is now projected at $15.30 to $16.20, up from the $15.20 to $16.20 expected a month ago.

The Class IV milk price forecast was raised for both years due to higher forecast butter prices. More >

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