Dairy WASDE Update – May ’20
According to the May USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2020 U.S. milk production projection was raised 200 million pounds from the previous month on higher than expected cow numbers, rebounding to a five month high projected level. 2020 projected milk production equates to a 1.6% YOY increase from 2019 production levels, finishing slightly above ten year average figures. Initial 2021 milk production projections are estimating volumes will increase an additional 1.0% as stronger expected milk per cow yields are expected to more than offset a slightly smaller dairy cow herd. 2020 dairy export forecasts were raised from the previous month on both a milk-fat and skim-solids basis on stronger than expected global demand. Initial 2021 dairy export forecasts are expected to remain consistent with 2020 levels on a milk-fat basis but higher on a skim-solids basis on relatively firm demand. 2020 projected dairy export volumes translated to 15.9% of total U.S. milk solids production while import volumes were equivalent to 3.7% of total U.S. milk solids production. 2021 projected dairy export volumes translated to 16.0% of total U.S. milk solids production, up slightly from the 2020 projection, while import volumes remained at 3.7% of total U.S. milk solids production. 2021 net dairy trade is projected to rebound to a three year high level but remain below the 2018 record highs. 2020 cheese and dry whey price forecasts were raised from the previous month, resulting in a higher Class III price forecast, however butter and nonfat dry milk price forecasts were reduced from the previous month, resulting in a lower Class IV price forecast. The 2020 Class III milk price forecast of $13.35/cwt was raised $0.60/cwt from the previous forecast however the 2020 Class IV milk price forecast of $11.90/cwt was reduced $0.25/cwt. The 2020 All-Milk price forecast of $14.55/cwt was raised $0.20/cwt from the previous forecast but remained 21.8% below 2019 price levels, reaching an 11 year low level, overall. The initial 2021 Class III milk price forecast of $14.20/cwt was 6.4% above 2020 projected levels while the initial 2021 Class IV milk price forecast of $12.20/cwt was 2.5% above 2020 projected levels. The initial 2021 All-Milk price forecast of $15.00/cwt is expected to rebound 3.1% from 2020 projected levels.