2016 U.S. Milk Production Projected Lower – Aug ’16
According to the August USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2016 U.S. milk production projection was lowered for the second consecutive month as growth in milk per cow estimates were reduced. 2016 projected milk production of 212.1 billion pounds was lowered by 0.3 billion pounds, reaching a four month low. 2016 projected production translates to a 1.7% increase from the 2015 production levels, which would be consistent with the ten year average growth rate. Projected milk production is expected to increase an additional 1.8% throughout 2017, finishing at an estimated level of 215.8 billion pounds, up 0.2 billion pounds from the previous month’s projection. Higher forecasted milk prices and lower feed costs expected throughout late 2016 and 2017 contributed to the increase in the 2017 milk production projection.
2016 export forecasts on a milk-fat basis were raised for 2016 on strength in whole milk powder (WMP) exports, while the 2017 forecast was unchanged. On a skim-solids basis, export forecasts for 2016 and 2017 were raised on higher WMP and whey sales. Import forecasts on a milk-fat basis were raised for both 2016 and 2017 on higher butter imports, resulting in a subsequent upward revision to fat basis stocks. The 2016 projected dairy export volumes translated to 14.0% of total U.S. milk solids production while import volumes were equivalent to 4.1% of total U.S. milk solids production. U.S. net dairy trade projections increased slightly, finishing at a six month high of 10.0% during the August report.
Cheese, dry whey and nonfat dry milk (NFDM) price forecasts were raised for 2016 however the butter price forecast was reduced as stocks remain larger than expected. The 2016 Class III price estimate was raised by $0.85/cwt at the midpoint, finishing at $14.80-$15.00/cwt, reflecting higher cheese and whey prices, while the 2016 Class IV price estimate was lowered by $0.10/cwt at the midpoint, finishing at $13.75-$14.05/cwt, as the lower projected butter price more than offset the higher NFDM price. The 2016 All-Milk price forecast of $16.25-$16.45/cwt was raised by $0.65/cwt at the midpoint but remained 4.3% below 2015 price levels. For 2017, projected prices of butter, cheese and whey were increased, while the NFDM price projection remained unchanged. The 2017 projected All-Milk price of $16.15-$17.15/cwt is expected to finish 1.8% above 2016 price levels, up $0.45/cwt from the previous month.
2016 export forecasts on a milk-fat basis were raised for 2016 on strength in whole milk powder (WMP) exports, while the 2017 forecast was unchanged. On a skim-solids basis, export forecasts for 2016 and 2017 were raised on higher WMP and whey sales. Import forecasts on a milk-fat basis were raised for both 2016 and 2017 on higher butter imports, resulting in a subsequent upward revision to fat basis stocks. The 2016 projected dairy export volumes translated to 14.0% of total U.S. milk solids production while import volumes were equivalent to 4.1% of total U.S. milk solids production. U.S. net dairy trade projections increased slightly, finishing at a six month high of 10.0% during the August report.
Cheese, dry whey and nonfat dry milk (NFDM) price forecasts were raised for 2016 however the butter price forecast was reduced as stocks remain larger than expected. The 2016 Class III price estimate was raised by $0.85/cwt at the midpoint, finishing at $14.80-$15.00/cwt, reflecting higher cheese and whey prices, while the 2016 Class IV price estimate was lowered by $0.10/cwt at the midpoint, finishing at $13.75-$14.05/cwt, as the lower projected butter price more than offset the higher NFDM price. The 2016 All-Milk price forecast of $16.25-$16.45/cwt was raised by $0.65/cwt at the midpoint but remained 4.3% below 2015 price levels. For 2017, projected prices of butter, cheese and whey were increased, while the NFDM price projection remained unchanged. The 2017 projected All-Milk price of $16.15-$17.15/cwt is expected to finish 1.8% above 2016 price levels, up $0.45/cwt from the previous month.