2015 U.S. Milk Production Projected Higher for Second Consecutive…
According to the July USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2015 projected U.S. milk production was revised slightly higher on gains in both cow numbers and milk per cow, increasing by 0.1 billion lbs to a total of 208.8 billion lbs. The upward revision in milk production was the second experienced in consecutive months, after seven consecutive monthly declines were experienced from Nov ’14 to May ’15. 2015 projected production of 208.8 billion lbs equates to a 1.4% YOY increase from 2014 production of 206.0 billion lbs. The projected 1.4% YOY increase in milk production would remain less than the three year average growth rate of 1.6%.
2016 projected U.S. milk production was revised lower due to higher expected feed prices, declining by 0.3 billion lbs to a total of 213.6 billion lbs. 2016 projected milk production translates to a 2.3% increase from the 2015 projected production of 208.8 billion lbs. The 2.3% increase in YOY milk production would be the third largest experienced in the past ten years.
Export forecasts on a fat basis were reduced as competition in global markets is expected to be strong in both 2015 and 2016. Skim-solids exports were raised from last month as weaker nonfat dry milk (NFDM) prices allow the U.S. to remain competitive in export markets. Fat basis and skim-solids imports were raised for both 2015 and 2016 on expectations of abundant global supplies of dairy products and continued strength in domestic demand for butter and cheese.
Cheese and butter prices were raised on continued domestic demand strength, but NFDM and whey prices were forecasted lower on abundant supplies. The 2015 Class III price estimate of $16.15-$16.45/cwt was lowered by $0.10/cwt on the high end and unchanged at the low end of the forecast while the 2015 Class IV price estimate of $13.70-$14.10/cwt was lowered by $0.50-$0.60/cwt on lower NFDM prices. The 2016 Class III price forecast of $15.90-$16.90/cwt was reduced by $0.25/cwt on lower whey prices, but remains 0.6% above the 2015 forecasted price at the midpoint. The 2016 Class IV price forecast of $14.45-$15.55/cwt was reduced by $0.95/cwt on lower NFDM prices but remains 2.7% above the 2015 forecasted level.
As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, at a range of $17.05-$17.35/cwt, down $0.10-$0.20/cwt from the previous month and 28.3% below the 2014 average All-Milk price of $23.98/cwt. The 2016 All-Milk price forecast of $17.00-$18.00/cwt was reduced by $0.45/cwt, declining to levels below 2015 forecasted prices on the low end of the forecast.
Export forecasts on a fat basis were reduced as competition in global markets is expected to be strong in both 2015 and 2016. Skim-solids exports were raised from last month as weaker nonfat dry milk (NFDM) prices allow the U.S. to remain competitive in export markets. Fat basis and skim-solids imports were raised for both 2015 and 2016 on expectations of abundant global supplies of dairy products and continued strength in domestic demand for butter and cheese.
Cheese and butter prices were raised on continued domestic demand strength, but NFDM and whey prices were forecasted lower on abundant supplies. The 2015 Class III price estimate of $16.15-$16.45/cwt was lowered by $0.10/cwt on the high end and unchanged at the low end of the forecast while the 2015 Class IV price estimate of $13.70-$14.10/cwt was lowered by $0.50-$0.60/cwt on lower NFDM prices. The 2016 Class III price forecast of $15.90-$16.90/cwt was reduced by $0.25/cwt on lower whey prices, but remains 0.6% above the 2015 forecasted price at the midpoint. The 2016 Class IV price forecast of $14.45-$15.55/cwt was reduced by $0.95/cwt on lower NFDM prices but remains 2.7% above the 2015 forecasted level.
As shown in the chart below, the 2015 All-Milk price is expected to be well below previous year price levels, at a range of $17.05-$17.35/cwt, down $0.10-$0.20/cwt from the previous month and 28.3% below the 2014 average All-Milk price of $23.98/cwt. The 2016 All-Milk price forecast of $17.00-$18.00/cwt was reduced by $0.45/cwt, declining to levels below 2015 forecasted prices on the low end of the forecast.