Dairy WASDE Update – Nov ’19
According to the November USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2019 U.S. milk production projection was raised by 400 million pounds from the previous month as stronger growth in milk per cow yields more than offset a slower than anticipated recovery in the milk cow inventory. 2019 projected milk production equates to a 0.5% YOY increase from 2018 production levels, which would remain at a ten year low. 2019 YTD U.S. production has increased 0.2% on a YOY basis throughout the first three quarters of the calendar year. The current 2019 U.S. milk production projection implies a 1.4% YOY increase in volumes throughout the final quarter of the calendar year. The 2020 U.S. milk production projection was raised by 800 million pounds from the previous forecast on expected continued gains in milk per cow yields. 2020 projected milk production equates to a 1.5% YOY increase from 2019 projected production levels, finishing slightly above ten year average figures. 2019 dairy export forecasts were unchanged on a milk-fat basis but raised on a skim-solids basis on stronger sales of nonfat dry milk/skim milk powder. 2019 dairy import forecasts were raised on a milk-fat basis but reduced on a skim-solids basis on recent trade data. For 2020, milk-fat export forecasts were reduced from the previous month as higher domestic cheese prices are expected to affect the competitiveness of U.S. cheese in international markets however skim-solids export forecasts were unchanged. 2020 import forecasts were unchanged on both a milk-fat and skim-solids basis. 2019 projected dairy export volumes translated to 14.9% of total U.S. milk solids production while import volumes were equivalent to 3.8% of total U.S. milk solids production. 2019 projected net dairy trade is expected to decline from the record high levels experienced throughout 2018, reaching a three year low level. 2020 projected net dairy trade is expected to rebound from 2019 projected levels but remain below the 2018 record highs. For 2019, cheese and nonfat dry milk price forecasts were raised from the previous month on demand strength however price forecasts for butter and dry whey were reduced on current price weakness. The 2019 Class III milk price forecast of $17.00/cwt was raised $0.45/cwt from the previous forecast as higher cheese prices more than offset lower dry whey prices while the 2019 Class IV milk price forecast of $16.30/cwt was raised $0.10/cwt as higher nonfat dry milk prices more than offset lower butter prices. The 2019 All-Milk price forecast of $18.60/cwt was raised $0.20/cwt from the previous forecast, finishing 14.4% above 2018 price levels. For 2020, cheese and nonfat dry milk price forecasts were raised from the previous month however butter and dry whey price forecasts were reduced as current price weakness is expected to carry into 2020. The 2020 Class III milk price forecast of $17.50/cwt was raised $0.30/cwt from the previous forecast however the 2020 Class IV milk price forecast of $15.95/cwt was reduced $0.15/cwt. The 2020 All-Milk price forecast of $18.85/cwt was unchanged from the previous forecast, finishing 1.3% above 2019 projected price levels. 2020 All-Milk price projections remain on pace to remain at a six year high level.