U.S. Milk Production Projected Lower – Nov ’16
U.S. Milk Production Projected Lower – Nov ’16
According to the November USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2016 U.S. milk production projection was reduced for the first time in three months as U.S. dairy cow inventory figures were revised lowered. 2016 projected milk production of 212.5 billion pounds was lowered by 0.2 billion pounds, but remains at the second highest figure experienced over the past five months. 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 quarter 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 217.0 billion pounds, down 0.3 billion pounds from the previous month’s projection.
Export forecasts were lowered for both 2016 and 2017 on a milkfat basis on slower sales of cheese and whole milk powder. Export volumes on a skim-solids basis were also lowered for 2016 on weaker sales of whey and milk protein concentrates, but remained unchanged for 2017. Import forecasts were largely unchanged from the previous month, declining slightly on a skim-solids basis for 2016. The 2016 projected dairy export volumes translated to 14.4% of total U.S. milk solids production while import volumes were equivalent to 4.1% of total U.S. milk solids production. U.S. net dairy trade projections declined slightly from the nine month high experienced during the October report.
Cheese and whey prices were raised for 2016 on recent price strength however butter and nonfat dry milk (NFDM) prices were lowered for 2016 as supplies remain large. For 2017, large supplies of butter are expected to continue to pressure prices, but prices of cheese, whey and NFDM are expected to strengthen. The 2016 Class III price forecast was raised by $0.40/cwt at the midpoint on higher cheese and whey prices, finishing at $14.70-$14.80/cwt, while the 2016 Class IV price forecast was lowered by $0.05/cwt at the midpoint on lower butter prices, finishing at $13.55-$13.75/cwt. The 2016 All-Milk price forecast of $16.00-$16.10/cwt was raised by $0.20/cwt at the midpoint, but remained 6.0% below 2015 price levels.
The 2017 Class III price increased $1.10/cwt from the previous month, finishing at $15.30-$16.20/cwt, however the 2017 Class IV price forecast declined $0.15/cwt from the previous month, finishing at $13.55-$14.55/cwt. The 2017 projected All-Milk price of $16.30-$17.20/cwt was raised by $0.75/cwt at the midpoint, finishing 4.4% above 2016 price levels.
Export forecasts were lowered for both 2016 and 2017 on a milkfat basis on slower sales of cheese and whole milk powder. Export volumes on a skim-solids basis were also lowered for 2016 on weaker sales of whey and milk protein concentrates, but remained unchanged for 2017. Import forecasts were largely unchanged from the previous month, declining slightly on a skim-solids basis for 2016. The 2016 projected dairy export volumes translated to 14.4% of total U.S. milk solids production while import volumes were equivalent to 4.1% of total U.S. milk solids production. U.S. net dairy trade projections declined slightly from the nine month high experienced during the October report.
Cheese and whey prices were raised for 2016 on recent price strength however butter and nonfat dry milk (NFDM) prices were lowered for 2016 as supplies remain large. For 2017, large supplies of butter are expected to continue to pressure prices, but prices of cheese, whey and NFDM are expected to strengthen. The 2016 Class III price forecast was raised by $0.40/cwt at the midpoint on higher cheese and whey prices, finishing at $14.70-$14.80/cwt, while the 2016 Class IV price forecast was lowered by $0.05/cwt at the midpoint on lower butter prices, finishing at $13.55-$13.75/cwt. The 2016 All-Milk price forecast of $16.00-$16.10/cwt was raised by $0.20/cwt at the midpoint, but remained 6.0% below 2015 price levels.
The 2017 Class III price increased $1.10/cwt from the previous month, finishing at $15.30-$16.20/cwt, however the 2017 Class IV price forecast declined $0.15/cwt from the previous month, finishing at $13.55-$14.55/cwt. The 2017 projected All-Milk price of $16.30-$17.20/cwt was raised by $0.75/cwt at the midpoint, finishing 4.4% above 2016 price levels.