U.S. Milk Production Projections Lowered – Apr ’15
According to the April USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2015 projected U.S. milk production was lowered to 210.0 billion lbs, down 1.1 billion lbs from the previous report. Production was revised lower on constrained output per cow due to dry conditions in the West. 2015 projected U.S. milk production has been revised lower in each of the last six WASDE reports. 2015 projected production of 210.0 billion lbs equates to a 1.9% YOY increase from 2014 production of 206.0 billion lbs. The projected 1.9% YOY increase in milk production would be less than the 2014 milk production growth rate of 2.4% but larger than the three year average growth rate of 1.6%. 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 relatively weak international prices. Fat basis imports were projected higher on expectations of greater demand for butterfat, while skim-solids imports were unchanged. Butter and cheese prices were raised on stronger than anticipated domestic demand, while whey prices remained unchanged. NFDM prices were lowered sharply as relatively weak exports are expected to pressure prices lower. The 2015 Class III price estimate of $16.20-$16.70/cwt was raised by an average of $0.20/cwt on the strength of cheese prices while the 2015 Class IV price estimate of $14.45-$15.05/cwt was lowered by an average of $0.90/cwt as lower NFDM prices more than offset higher butter prices. As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, at a range of $17.10-$17.60/cwt. The 2015 All-Milk price forecast remained at the same midpoint price vs. the previous report, but with a narrowed range. The top end of the 2015 All-Milk price forecast has declined in each of the past eight WASDE reports, with the midpoint price currently at a 27.6% discount to the 2014 average All-Milk price of $23.98/cwt.