WASDE Forecast Milk Production Up; Price Down

The World Agriculture Supply and Demand Estimates from USDA this week raised the milk production forecast for 2017 as increases in milk per cow more than offset a slower rate of milk cow expansion. For 2017, fat basis exports is reduced from the previous month on slowing cheese shipments, while fat basis imports are raised on increased purchases of butterfat. On a skim-solids basis, the export forecast for 2017 was lowered on weaker than expected skim milk powder sales, while the import forecast is raised due to stronger demand for a number of dairy products. For 2018, the milk production forecast was reduced from the previous month on slower growth in cow inventories. The annual fat basis export forecast is unchanged from the previous month, but the import forecast was reduced on expected declining cheese imports.

The skim-solids basis export forecast was reduced from the previous month as competition in international powder markets is expected to remain strong; imports are reduced on lower milk protein and cheese shipments.

Butter, NDM, and whey prices are forecast lower for 2017 while cheese prices are forecast higher from the previous month.

The 2017 Class III price is raised as higher forecast cheese prices offset lower whey prices.

The Class IV price is reduced on lower butter and NDM. For 2018, all dairy product prices are reduced, resulting in lower Class III and Class IV product prices.

The all milk price is reduced to $17.70 to $17.90 per cwt for 2017 and $17.75 to $18.55 per cwt for 2018.

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