Dairy WASDE Update – Feb ’17
According to the February USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2017 U.S. milk production projection was raised for the second consecutive month on both larger cow numbers and higher per cow productivity. 2017 projected milk production of 217.4 billion pounds was raised by 0.3 billion pounds, finishing at the highest projected figure on record. 2017 projected milk production equates to a 2.6% YOY increase from 2016 production levels when adjusted for leap year. The projected increase in milk production would be the largest experienced throughout the past 11 years on a percentage basis.
Export forecasts for 2017 were unchanged on a milk-fat basis but raised slightly on a skim-solids basis. 2017 import forecasts were reduced on a milk-fat basis as domestic butterfat is expected to be more competitive with the EU-28 while skim-solids imports were unchanged. The 2017 projected dairy export volumes translated to 14.7% of total U.S. milk solids production, unchanged from the previous month, while import volumes were equivalent to 3.8% of total U.S. milk solids production, down slightly from the previous month. 2017 U.S. net dairy trade of 10.8% is projected to reach a three year high.
Butter and cheese price forecasts for 2017 were lowered as strong production translated into relatively high beginning stocks. The 2017 nonfat dry milk price forecast was unchanged from the previous month, while the 2017 dry whey price was raised from the previous month on stronger than expected domestic and international demand. The 2017 Class III price forecast was raised $0.05/cwt from the previous month at the midpoint, finishing at $16.45-$17.15/cwt, however the 2017 Class IV price forecast was lowered $0.20/cwt from the previous month at the midpoint, finishing at $15.10-$15.90/cwt. The 2017 projected All-Milk price of $17.70-$18.40/cwt was raised by $0.05/cwt at the midpoint, finishing 11.4% above 2016 price levels.
Export forecasts for 2017 were unchanged on a milk-fat basis but raised slightly on a skim-solids basis. 2017 import forecasts were reduced on a milk-fat basis as domestic butterfat is expected to be more competitive with the EU-28 while skim-solids imports were unchanged. The 2017 projected dairy export volumes translated to 14.7% of total U.S. milk solids production, unchanged from the previous month, while import volumes were equivalent to 3.8% of total U.S. milk solids production, down slightly from the previous month. 2017 U.S. net dairy trade of 10.8% is projected to reach a three year high.
Butter and cheese price forecasts for 2017 were lowered as strong production translated into relatively high beginning stocks. The 2017 nonfat dry milk price forecast was unchanged from the previous month, while the 2017 dry whey price was raised from the previous month on stronger than expected domestic and international demand. The 2017 Class III price forecast was raised $0.05/cwt from the previous month at the midpoint, finishing at $16.45-$17.15/cwt, however the 2017 Class IV price forecast was lowered $0.20/cwt from the previous month at the midpoint, finishing at $15.10-$15.90/cwt. The 2017 projected All-Milk price of $17.70-$18.40/cwt was raised by $0.05/cwt at the midpoint, finishing 11.4% above 2016 price levels.