Dairy WASDE Update – Jun ’18
According to the June USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2018 U.S. milk production projection was reduced by 0.7 billion pounds from the previous month on slightly lower milk cow numbers and slower expected yield growth, finishing at the lowest projected level on record. 2018 projected milk production equates to a 1.2% YOY increase from 2017 production levels, which would be a five year low. The 2019 U.S. milk production projection was reduced by 0.4 billion pounds from the previous month on continued slow growth in milk per cow yields and unchanged cow numbers. 2019 projected milk production equates to a 1.4% increase from 2018 projected levels, remaining slightly below ten year average growth rates. 2018 export forecasts were raised from the previous month on both a milk-fat and skim-solids basis on strong global demand while import forecasts were raised on a milk-fat basis but lowered on a skim-solids basis. Strong global demand for a number of fat-containing products is expected to mitigate the impact of Mexico’s tariffs on U.S. cheese throughout the duration of the year. 2018 projected dairy export volumes translated to 16.6% of total U.S. milk solids production while import volumes were equivalent to 3.5% of total U.S. milk solids production. For 2019, export forecasts are projected lower than 2018 levels on both a milk-fat and skim-solids basis while import forecasts were reduced from 2018 levels on a milk-fat basis and unchanged on a skim-solids basis. 2018 projected net dairy trade of 13.1% is on pace to reach a record high while 2019 projected net dairy trade is expected to remain at the second highest figure on record, down slightly from the 2018 projected record highs. The 2018 Class III price forecast of $15.05-$15.45/cwt was raised by $0.20/cwt at the midpoint on stronger whey prices but remained 5.7% below 2017 price levels. The 2019 Class III price forecast of $15.30-$16.30/cwt represented a 3.6% increase from 2018 projected price levels, up $0.50/cwt from the previous month on stronger cheese and whey prices. The 2018 Class IV price forecast of $14.30-$14.80/cwt was raised by $0.50/cwt at the midpoint on stronger butter and nonfat dry milk prices but remained 4.0% below 2017 price levels. The 2019 Class IV price forecast of $13.70-$14.80/cwt was raised $0.05/cwt from the previous month as stronger nonfat dry milk prices more than offset slightly lower butter prices but remained 2.1% below 2018 projected price levels. The 2018 projected All-Milk price of $16.20-$16.70/cwt was raised by $0.50/cwt at the midpoint but remained 6.8% below 2017 price levels. The 2019 All-Milk price forecast of $16.70-$17.70/cwt was raised $0.45/cwt from the previous month, representing a 2.4% increase from 2018 projected price levels.