Dairy WASDE Update – Oct ’19
According to the October USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2019 U.S. milk production projection was raised by 200 million pounds from the previous month on higher projected cow numbers and stronger growth in milk per cow yields. 2019 projected milk production equates to a 0.3% YOY increase from 2018 production levels, which would remain at a ten year low. 2019 YTD U.S. production is down slightly on a YOY basis throughout the first two thirds of the calendar year. The current 2019 U.S. milk production projection implies a 0.8% YOY increase in volumes throughout the final third of the calendar year. The 2020 U.S. milk production projection was raised by 400 million pounds from the previous forecast on expected continued gains in milk per cow yields. 2020 projected milk production equates to a 1.3% YOY increase from 2019 projected production levels, remaining slightly below ten year average figures. 2019 and 2020 dairy export forecasts were reduced on a milk-fat basis on continued competitive pressure on U.S. cheese exports. 2019 dairy exports on a skim-solids basis were projected lower on weaker expected exports of cheese and skim milk powder/nonfat dry milk but raised for 2020 on strong expected global demand for skim milk powder/nonfat dry milk. 2019 dairy import forecasts were unchanged from the previous month on both a milk-fat and skim-solids basis but reduced for 2020 on the recently announced additional tariffs on a number of European dairy products. 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 but price forecasts for butter and dry whey were reduced. The 2019 Class III milk price forecast of $16.55/cwt was raised $0.10/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 $16.20/cwt was raised $0.05/cwt as higher nonfat dry milk prices more than offset lower butter prices. The 2019 All-Milk price forecast of $18.40/cwt was raised $0.05/cwt from the previous forecast, finishing 13.2% above 2018 price levels. For 2020, cheese and nonfat dry milk price forecasts were raised from the previous month however the butter price forecast was reduced while the dry whey price forecast was unchanged from the previous month. The 2020 Class III milk price forecast of $17.20/cwt was raised $0.15/cwt from the previous forecast however the 2020 Class IV milk price forecast of $16.10/cwt was reduced $0.05/cwt. The 2020 All-Milk price forecast of $18.85/cwt was unchanged from the previous forecast, finishing 2.4% above 2019 projected price levels. 2020 All-Milk price projections are on pace to remain at a six year high level.