Dairy WASDE Update – Sep ’19
According to the September USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2019 U.S. milk production projection was raised by 100 million pounds from the previous month as stronger growth in milk per cow yields more than offset lower cow numbers. 2019 projected milk production equates to a 0.2% YOY increase from 2018 production levels, which would remain at a ten year low. 2019 YTD U.S. production is down slightly on a YOY basis throughout the first seven months of the calendar year. The current 2019 U.S. milk production projection implies a 0.5% YOY increase in volumes throughout the final five months of the calendar year. The 2020 U.S. milk production projection was reduced by 200 million pounds from the previous forecast as slower growth in the dairy cow herd is expected to more than offset higher forecasted milk per cow yields. 2020 projected milk production equates to a 1.2% YOY increase from 2019 projected production levels, finishing below ten year average figures. 2019 and 2020 dairy export forecasts were reduced on a milk-fat basis on weaker expected global demand for U.S. butterfat products. The 2019 export forecast on a skim-solids basis was reduced from the previous month on weakness in a number of dairy products, but the 2020 skim-solids export forecast was raised primarily on expected strong demand for lactose. Dairy import forecasts on a milk-fat basis were reduced for 2019 and 2020 on recent trade data and expectations of slower butterfat imports but raised for 2019 and 2020 on a skim-solids basis on higher-than-expected imports of milk protein concentrations and a number of other dairy products. 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 and 2020, price forecasts for cheese, dry whey and nonfat dry milk were raised from the previous month while the butter price forecast was reduced. The 2019 Class III milk price forecast of $16.45/cwt was raised $0.15/cwt from the previous forecast however the 2019 Class IV milk price forecast of $16.15/cwt was reduced $0.15/cwt. The 2019 All-Milk price forecast of $18.35/cwt was raised $0.05/cwt from the previous forecast, finishing 12.9% above 2018 price levels. The 2020 Class III milk price forecast of $17.05/cwt was raised $0.50/cwt from the previous forecast however the 2020 Class IV milk price forecast of $16.15/cwt was reduced $0.30/cwt. The 2020 All-Milk price forecast of $18.85/cwt was raised $0.05/cwt from the previous forecast, finishing 2.7% above 2019 projected price levels. 2020 All-Milk price projections are on pace to reach a six year high level.