Dairy WASDE Update – Dec ’19
According to the December USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2019 U.S. milk production projection was unchanged from the previous month. 2019 projected milk production equates to a 0.5% YOY increase from 2018 production levels, which would remain at a ten year low. 2019 YTD U.S. production has increased 0.2% on a YOY basis throughout the first ten months of the calendar year. The current 2019 U.S. milk production projection implies a 1.4% YOY increase in volumes throughout the final two months of the calendar year. The 2020 U.S. milk production projection was also unchanged from the previous month. 2020 projected milk production equates to a 1.5% YOY increase from 2019 projected production levels, finishing slightly above ten year average figures. 2019 dairy export forecasts were unchanged on a milk-fat basis but raised on a skim-solids basis on stronger sales of nonfat dry milk/skim milk powder. 2019 dairy import forecasts were reduced slightly on a milk-fat basis on lower expected imports of butterfat products and unchanged on a skim-solids basis. For 2020, export forecasts were raised slightly from the previous month on both a milk-fat and skim-solids basis on higher projected exports of butterfat and nonfat dry milk/skim milk powder. 2020 import forecasts were reduced slightly on a milk-fat and unchanged on a skim-solids basis. 2019 projected dairy export volumes translated to 15.0% 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, butter and cheese price forecasts were reduced from the previous month however the nonfat dry milk price forecast was raised while the dry whey price forecast was unchanged. The 2019 Class III milk price forecast of $16.95/cwt was reduced by $0.05/cwt from the previous forecast on lower cheese prices while the 2019 Class IV milk price forecast of $16.30/cwt was unchanged from the previous month as higher nonfat dry milk prices offset lower butter prices. The 2019 All-Milk price forecast of $18.60/cwt was also unchanged from the previous month, remaining 14.4% above 2018 price levels. For 2020, the butter price forecast was reduced on continued demand softness however the cheese price forecast was raised slightly on stronger demand. 2020 dry whey and nonfat dry milk price forecasts were each raised from the previous month on higher expected export demand. The 2020 Class III milk price forecast of $17.65/cwt was raised $0.15/cwt from the previous forecast while the 2020 Class IV milk price forecast of $16.95/cwt was raised $1.00/cwt. The 2020 All-Milk price forecast of $19.40/cwt was raised $0.55/cwt from the previous forecast, finishing 4.3% above 2019 projected price levels. The 2020 All-Milk price projection is on pace to reach a six year high level.