WASDE Forecasts Lower Milk, Cheese Prices
The USDA World Agricultural Supply and Demand Estimates (WASDE) for October raised 2016 and 2017 milk production forecasts over last month due to cow inventories growing more rapidly than previously expected. The report suggests higher production capacity, stating that higher cow inventories appear to reflect growth in herds supplying expanding dairy product facilities.
Milk price forecasts are lower at $15.80 to $15.90 for 2016 and $15.55 to $16.45 for 2017. The October forecast is down 30 cents from September for 2016 prices and 60 cents for 2017.
Higher milk production also dropped the WASDE forecast for cheese and butter price for 2016 and 2017. However, nonfat dry milk (NDM) and whey prices will likely benefit from increased competitiveness in export markets, and stronger exports will help support prices of those products.
Import forecasts for 2016 and 2017 are raised on higher expected imports of butter and several other dairy products. Exports are forecast higher as increases in Oceania prices and relatively low U.S. prices are expected to make the U.S. more competitive in world markets. Ending stocks are reduced as lower prices encourage increased demand from both export and domestic markets.