U.S. Milk Production Projected Higher – Jan ’17
According to the January USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2016 U.S. milk production projection was raised for the first time in three months on slightly larger cow numbers. 2016 projected milk production of 212.5 billion pounds was raised by 0.1 billion pounds, finishing at a three month high. 2016 projected milk production equates to a 1.6% YOY increase from 2015 production levels when adjusted for leap year and a 2.4% implied YOY increase in milk production over the final month of the year. Projected milk production is expected to increase an additional 2.4% throughout 2017 when adjusted for leap year, finishing at an estimated level of 217.1 billion pounds, up 0.3 billion pounds from the previous month’s projection. 2017 production figures were raised from last month as improved margins are expected to support increases in both cow numbers and milk per cow productivity. The 2017 projected increase in milk production would be the largest experienced throughout the past 11 years on a percentage basis.
Export forecasts were raised for 2016 on recent trade data but remained largely unchanged for 2017. Export volumes were forecasted slightly lower on a milkfat basis for 2017 while forecasts were raised slightly on a skim-solids basis. The 2017 projected dairy export volumes translated to 14.7% of total U.S. milk solids production while import volumes were equivalent to 3.9% of total U.S. milk solids production, unchanged from the previous month.
Product price forecasts were raised for 2017 as domestic demand strength is expected to continue. The 2017 Class III price forecast was raised $0.50/cwt from the previous month at the midpoint, finishing at $16.35-$17.15/cwt while the 2017 Class IV price forecast was raised $1.05/cwt from the previous month at the midpoint, finishing at $15.25-$16.15/cwt. The 2017 projected All-Milk price of $17.60-$18.40/cwt was raised by $0.75/cwt at the midpoint, finishing 11.1% above 2016 price levels.
Export forecasts were raised for 2016 on recent trade data but remained largely unchanged for 2017. Export volumes were forecasted slightly lower on a milkfat basis for 2017 while forecasts were raised slightly on a skim-solids basis. The 2017 projected dairy export volumes translated to 14.7% of total U.S. milk solids production while import volumes were equivalent to 3.9% of total U.S. milk solids production, unchanged from the previous month.
Product price forecasts were raised for 2017 as domestic demand strength is expected to continue. The 2017 Class III price forecast was raised $0.50/cwt from the previous month at the midpoint, finishing at $16.35-$17.15/cwt while the 2017 Class IV price forecast was raised $1.05/cwt from the previous month at the midpoint, finishing at $15.25-$16.15/cwt. The 2017 projected All-Milk price of $17.60-$18.40/cwt was raised by $0.75/cwt at the midpoint, finishing 11.1% above 2016 price levels.