Dairy WASDE Update – Aug ’18
According to the August USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2018 U.S. milk production projection was unchanged from the previous month, remaining at the lowest projected level on record. 2018 projected milk production equates to a 1.1% YOY increase from 2017 production levels, which would be a five year low. The 2019 U.S. milk production projection was raised by 0.3 billion pounds from the previous month on slightly higher cow numbers and increased milk per cow yields. 2019 projected milk production equates to a 1.4% increase from 2018 projected levels, remaining slightly below ten year average growth rates. 2018 export forecasts were raised from the previous month on a milk-fat basis on stronger sales of butter and other fat-containing products but lowered on a skim-solids basis due to recently implemented Chinese tariffs on select dairy products and weaker than expected sales of nonfat dry milk. 2018 import forecasts were raised slightly on a milk-fat basis on higher imports of butterfat products while remaining unchanged on a skim-solids basis. 2018 projected dairy export volumes translated to 16.5% 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 were unchanged on a milk-fat basis but reduced slightly on a skim-solids basis on expected continued weak sales of lactose. 2019 import forecasts remained unchanged on a milk-fat basis but were reduced slightly on a skim-solids basis on lower expected imports of milk protein concentrates. 2018 projected net dairy trade of 13.0% is on pace to reach a record high while 2019 projected net dairy trade is expected to remain at the second highest figure on record, down slightly from the 2018 projected record highs. Butter, cheese, dry whey and nonfat dry milk price projections were all raised for 2018, with price strength expected to carry through into 2019 for cheese, dry whey and nonfat dry milk on higher than expected demand. The 2019 butter price forecast was unchanged from the previous month. The 2018 Class III price forecast of $14.50-$14.70/cwt was raised by $0.15/cwt at the midpoint but remained 9.7% below 2017 price levels. The 2019 Class III price forecast of $14.95-$15.95/cwt was raised by $0.25/cwt, finishing 5.8% above 2018 projected price levels. The 2018 Class IV price forecast of $13.95-$14.25/cwt was raised by $0.25/cwt at the midpoint but remained 7.0% below 2017 price levels. The 2019 Class IV price forecast of $13.75-$14.85/cwt was raised $0.10/cwt from the previous month, finishing 1.4% above 2018 projected price levels. The 2018 projected All-Milk price of $16.10-$16.30/cwt was raised by $0.10/cwt at the midpoint but remained 8.2% below 2017 price levels. The 2019 All-Milk price forecast of $16.45-$17.45/cwt was raised $0.20/cwt from the previous month, finishing 4.6% above 2018 projected price levels.