Dairy WASDE Update – May ’18
According to the May USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2018 U.S. milk production projection was reduced by 0.3 billion pounds from the previous month on lower milk cow numbers and slower yield growth, finishing tied for the lowest projected level on record. 2018 projected milk production equates to a 1.5% YOY increase from 2017 production levels, consistent with ten year average figures. U.S. milk production is projected to increase by an additional 1.3% throughout 2019 on a continued gradual increase in milk per cow yields, coupled with largely flat cow numbers. The 2019 projected growth rate in U.S. milk production would be lowest experienced in four years. 2018 export forecasts were raised from the previous month on both a milk-fat and skim-solids basis on strong global demand while import forecasts were lowered. 2018 projected dairy export volumes translated to 16.3% of total U.S. milk solids production while import volumes were equivalent to 3.5% of total U.S. milk solids production. For 2019, export forecasts are projected higher on both a milk-fat and skim-solids basis on robust global demand while import forecasts were unchanged from 2018 levels. 2018 projected net dairy trade of 12.8% is on pace to reach a record high while 2019 projected net dairy trade is expected to slightly eclipse the 2018 highs. The 2018 Class III price forecast of $14.80-$15.30/cwt was raised by $0.60/cwt at the midpoint on stronger cheese and whey prices but remained 6.9% below 2017 price levels. The initial 2019 Class III price forecast of $14.80-$15.80/cwt represented a 1.7% increase from 2018 projected price levels. The 2018 Class IV price forecast of $13.75-$14.35/cwt was raised by $0.50/cwt at the midpoint as higher forecasted nonfat dry milk prices more than offset lower projected butter prices but remained 7.3% below 2017 price levels. The initial 2019 Class IV price forecast of $13.65-$14.75/cwt represented a 1.1% increase from 2018 projected price levels. The 2018 projected All-Milk price of $16.20-$16.70/cwt was raised by $0.50/cwt at the midpoint but remained 6.8% below 2017 price levels. The initial 2019 All-Milk price forecast of $16.25-$17.25/cwt represented a 1.8% increase from 2018 projected price levels.