U.S. Milk Production Projections Lowered – Feb ’15
According to the February USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2015 projected U.S. milk production was lowered to 211.5 billion lbs, down 0.2 billion lbs from the previous report. Slower growth in output per cow more than offset faster herd expansion, resulting in the lower production revision. 2015 projected production of 211.5 billion lbs equates to a 2.7% YOY increase from 2014 production of 206.0 billion lbs and would be a record high production level on an absolute basis. The projected 2.7% YOY increase in milk production would be slightly higher than the 2014 YOY milk production growth rate of 2.4% and would be the largest YOY increase in production in the past nine years.
Export forecasts on a skim solids basis for 2015 were raised due to stronger sales of whey. Export forecasts on a fat basis for 2015 were unchanged from last month while import forecasts on a fat basis for 2015 were raised on expectations of greater cheese imports.
Butter and whey prices for 2015 were forecasted higher, supported by strong demand and price strength to date. The NFDM price for 2015 was lowered as strong competition in export markets is expected to persist during the first half of the year. The cheese price for 2015 was unchanged, with a narrowed range. The 2015 Class III price estimate of $16.30-$17.00 per cwt was raised slightly on higher whey prices while the 2015 Class IV price estimate of $15.10-$15.90 per cwt was down $0.50-$0.60 as a lower NFDM price more than offset a higher butter price. As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, and was lowered $0.35-$0.45 to $17.40-$18.10 per cwt. 2015 All-Milk price forecasts have been reduced in each of the last six WASDE reports, and are currently at a 26.0% discount to the 2014 average All-Milk price. The 2014 average All-Milk price of $23.98 finished slightly below the estimated range of $24.05-$24.15/cwt in Jan ’15.
Export forecasts on a skim solids basis for 2015 were raised due to stronger sales of whey. Export forecasts on a fat basis for 2015 were unchanged from last month while import forecasts on a fat basis for 2015 were raised on expectations of greater cheese imports.
Butter and whey prices for 2015 were forecasted higher, supported by strong demand and price strength to date. The NFDM price for 2015 was lowered as strong competition in export markets is expected to persist during the first half of the year. The cheese price for 2015 was unchanged, with a narrowed range. The 2015 Class III price estimate of $16.30-$17.00 per cwt was raised slightly on higher whey prices while the 2015 Class IV price estimate of $15.10-$15.90 per cwt was down $0.50-$0.60 as a lower NFDM price more than offset a higher butter price. As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, and was lowered $0.35-$0.45 to $17.40-$18.10 per cwt. 2015 All-Milk price forecasts have been reduced in each of the last six WASDE reports, and are currently at a 26.0% discount to the 2014 average All-Milk price. The 2014 average All-Milk price of $23.98 finished slightly below the estimated range of $24.05-$24.15/cwt in Jan ’15.