Dairy WASDE Update – Jan ’18
According to the January USDA World Agricultural Supply and Demand Estimate (WASDE) report, the 2017 U.S. milk production projection was reduced for the third consecutive month. 2017 projected milk production of 215.5 billion pounds was reduced by 0.2 billion pounds, finishing at the lowest projected figure experienced throughout the past 19 months. 2017 projected milk production equates to a 1.7% YOY increase from 2016 production levels when adjusted for leap year and a 1.3% implied YOY increase in milk production over the final month of the year. U.S. milk production increased by 1.0% YOY throughout Nov ’17. The 2018 U.S. milk production projection of 218.8 billion pounds was reduced by 0.5 billion pounds as slower growth in milk per cow yields is expected to persist, coupled with lower cow numbers. 2018 projected milk production equates to an additional 1.5% YOY increase from 2017 projected production levels, consistent with ten year average figures. The 2018 U.S. milk production projection was the lowest on record.
2018 export forecasts were raised on both a milkfat and skim-solids basis on expected robust foreign demand for a number of products. 2018 import forecasts were reduced on both a milkfat and skim-solids basis on slowing demand for butter and milk protein concentrate products. 2018 projected dairy export volumes translated to 15.4% of total U.S. milk solids production while import volumes were equivalent to 3.6% of total U.S. milk solids production. 2018 projected net dairy trade of 11.8% is on pace to reach a four year high.
2018 dairy product price forecasts were lowered on slowing domestic demand and global competition. The 2018 Class III price forecast of $14.25-$15.05/cwt was reduced by $1.05/cwt at the midpoint, finishing 9.4% below 2017 price levels, while the 2018 Class IV price forecast of $13.55-$14.45/cwt was reduced by $0.35/cwt at the midpoint, finishing 7.7% below the 2017 Class IV price. The 2018 projected All-Milk price of $15.80-$16.60/cwt was reduced by $0.85/cwt from the previous month at the midpoint, finishing 8.2% lower YOY.
2018 export forecasts were raised on both a milkfat and skim-solids basis on expected robust foreign demand for a number of products. 2018 import forecasts were reduced on both a milkfat and skim-solids basis on slowing demand for butter and milk protein concentrate products. 2018 projected dairy export volumes translated to 15.4% of total U.S. milk solids production while import volumes were equivalent to 3.6% of total U.S. milk solids production. 2018 projected net dairy trade of 11.8% is on pace to reach a four year high.
2018 dairy product price forecasts were lowered on slowing domestic demand and global competition. The 2018 Class III price forecast of $14.25-$15.05/cwt was reduced by $1.05/cwt at the midpoint, finishing 9.4% below 2017 price levels, while the 2018 Class IV price forecast of $13.55-$14.45/cwt was reduced by $0.35/cwt at the midpoint, finishing 7.7% below the 2017 Class IV price. The 2018 projected All-Milk price of $15.80-$16.60/cwt was reduced by $0.85/cwt from the previous month at the midpoint, finishing 8.2% lower YOY.