Dairy WASDE Update – Jan ’20
According to the January USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2019 U.S. milk production projection was reduced 300 million pounds from the previous month on slower expected milk per cow yields, finishing at a three month low projected level. 2019 projected milk production equates to a 0.3% YOY increase from 2018 production levels, remaining at a ten year low level. 2019 YTD U.S. production has increased 0.3% on a YOY basis throughout the first 11 months of the calendar year. The current 2019 U.S. milk production projection implies a 0.9% YOY increase in volumes throughout the final month of the calendar year. The 2020 U.S. milk production projection was reduced 400 million pounds from the previous month, also finishing at a three month low projected level. 2020 projected milk production equates to a 1.4% YOY increase from 2019 projected production levels, finishing equal to ten year average figures. 2019 dairy export forecasts were raised on both a milk-fat and skim-solids basis on recent trade data, while 2019 dairy import forecasts remained unchanged from the previous month. For 2020, dairy export forecasts were raised slightly on both a milk-fat and skim-solids basis on strong global demand for cheese, nonfat dry milk and other dairy-containing products. The 2020 dairy import forecast was reduced slightly on a milk-fat basis on lower expected butterfat and cheese imports while remaining unchanged on a skim-solids basis. 2020 projected dairy export volumes translated to 15.7% of total U.S. milk solids production while import volumes were equivalent to 3.5% of total U.S. milk solids production. 2020 projected net dairy trade is expected to rebound from 2019 projected levels but remain below the 2018 record highs. For 2020, the butter, cheese and dry whey price forecasts were reduced from the previous month on demand weakness and relatively high stock levels. The 2020 nonfat dry milk price was raised from the previous month on continued strength in export demand, however. The 2020 Class III milk price forecast of $17.35/cwt was reduced $0.30/cwt from the previous forecast while the 2020 Class IV milk price forecast of $16.90/cwt was reduced $0.05/cwt. The 2020 All-Milk price forecast of $19.25/cwt was reduced $0.15/cwt from the previous forecast but remained 3.5% above 2019 projected price levels. The 2020 All-Milk price projection is on pace to reach a six year high level.