The May 10 World Agricultural Supply and Demand Estimate report has milk production for 2020 forecast higher than 2019. Dairy herds are expected to begin to expand as producers respond to higher milk prices and lower feed costs. Milk per cow is expected to continue increasing, and the forecast also reflects the one extra day due to leap year.
Commercial exports on both fat and skim-solids bases are expected to grow in 2020 as U.S. products are expected to become more competitive due to slower growth in competitor supplies. For 2020, fat basis imports are forecast higher while skim-solids basis imports are expected to decline slightly next year.
Cheese, butter, and nonfat dry milk (NDM) prices are forecast higher than the previous year on robust demand expectations. However, the whey price forecast is slightly lower on continued softness in export demand. The Class III price is forecast to increase as stronger cheese prices more than offset the weaker expected whey price. The Class IV price is expected to increase due to higher NDM and butter prices. The 2020 all milk price is forecast at $18.80 per cwt.
The 2019 milk production forecast is reduced from the previous month on declining milk cow inventories and slow growth in milk per cow. Fat basis exports are raised from the previous month on strong cheese sales to key trading partners. The skim-solids basis export forecast is also raised on higher expected cheese and lactose sales. The fat basis import forecast is unchanged from last month while the skim-solids basis import forecast is reduced on lower imports of milk protein products. Cheese and NDM price forecasts are raised from the previous month resulting in both Class III and Class IV prices being raised. The 2019 all milk price is forecast at $18.05 per cwt.