U.S. Milk Production Projections Lowered – Mar ’15
According to the March USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2015 projected U.S. milk production was lowered to 211.1 billion lbs, down 0.4 billion lbs from the previous report. Slower growth in output per cow continues to more than offset faster herd expansion, resulting in the lower production revision. 2015 projected U.S. milk production has been revised lower in each of the last five WASDE reports. 2015 projected production of 211.1 billion lbs equates to a 2.5% YOY increase from 2014 production of 206.0 billion lbs and would be a record high production level on an absolute basis. The projected 2.5% YOY increase in milk production would be slightly higher than the 2014 YOY milk production growth rate of 2.4% and would be the largest YOY increase in production in the past nine years. Export forecasts on both a fat and skim-solids basis were reduced for 2015 as export demand continues to be hampered by a strong dollar and increased competition from other exporters. Fat basis imports were projected higher on expectations of greater butterfat imports. Butter and NFDM prices for 2015 were forecasted higher, supported by strong demand and price strength to date. Cheese prices were unchanged at the midpoint while whey prices were lowered on weaker demand. The 2015 Class III price estimate of $15.95-$16.55/cwt was lowered $0.35-$0.45 due to reduced whey prices while the 2015 Class IV price estimate of $15.30-$16.00/cwt increased $0.10-$0.20 due to higher NFDM and butter prices. As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, and was lowered $0.35-$0.45 to $17.05-$17.65/cwt. 2015 All-Milk price forecasts have been reduced in each of the last seven WASDE reports, and are currently at a 27.6% discount to the 2014 average All-Milk price of $23.98/cwt.