Dairy WASDE Update – Aug ’19
According to the August USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2019 U.S. milk production projection was reduced by 300 million pounds from the previous month, reaching the lowest figure on record since projections began in May ’18. 2019 projected milk production equates to a 0.1% YOY increase from 2018 production levels, which would be a ten year low. 2019 YTD U.S. production is down slightly on a YOY basis throughout the first half of the calendar year. The current 2019 U.S. milk production projection implies a 0.3% YOY increase in volumes throughout the second half of the calendar year. The 2020 U.S. milk production projection was reduced by 400 million pounds from the previous forecast on expectations of a smaller dairy herd and slower growth in milk per cow yields. 2020 projected milk production equates to a 1.3% YOY increase from 2019 projected production levels, finishing slightly below ten year average figures. 2019 and 2020 dairy export forecasts were reduced on both a milk-fat and skim-solids basis on lower expected shipments of butterfat and nonfat dry milk and increased global competition. Dairy import forecasts were raised for 2019 and 2020 on both a milk-fat and skim-solids basis on strong demand for imported butter, milk protein concentrates and other dairy products. 2019 projected dairy export volumes translated to 15.1% of total U.S. milk solids production while import volumes were equivalent to 3.7% of total U.S. milk solids production. 2019 projected net dairy trade is expected to decline from the record high levels experienced throughout 2018 but remain 1.5% above three year average figures. 2020 projected net dairy trade is expected to rebound from 2019 projected levels but remain below the 2018 record highs. For 2019, price forecasts for butter, cheese and dry whey were raised from the previous month while the nonfat dry milk price forecast was reduced on current price weakness and slowing demand. The 2019 Class III milk price forecast of $16.30/cwt was raised $0.25/cwt from the previous forecast however the 2019 Class IV milk price forecast of $16.30/cwt was reduced $0.15/cwt. The 2019 All-Milk price forecast of $18.30/cwt was raised $0.10/cwt from the previous forecast, finishing 12.5% above 2018 price levels. For 2020, the butter, cheese and nonfat dry milk price forecasts were reduced from the previous month while the dry whey price forecast remained unchanged from the previous month. The 2020 Class III milk price forecast of $16.55/cwt was reduced $0.10/cwt from the previous forecast while the 2020 Class IV milk price forecast of $16.45/cwt was reduced $0.30/cwt. The 2020 All-Milk price forecast of $18.80/cwt was reduced $0.05/cwt from the previous forecast but remained 2.7% above 2019 projected price levels. 2020 All-Milk price projections remain on pace to reach a six year high level.