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October 10, 2019

USDA Pushes 2020 Class III Milk Price Expectations Higher

 |  By: Anna-Lisa Laca

In their October World Agriculture Supply and Demand Estimates report on Thursday, USDA noted they expect milk production to increase in 2020. Fortunately, they also expect Class III milk prices to push higher next year. 

“Milk production forecasts for 2019 are raised on higher cow numbers and stronger growth in milk per cow,” they said in the report. “For 2020, expected continued gains in milk per cow supported an increase in the milk production forecast.”

USDA doesn’t not expect imports to increase in 2019 and lowered import expectations for 2020 because of the EU tariffs on dairy products. Additionally, the agency reduced fat basis export forecasts for 2019 and 2020 because of competitive pressure on cheese exports. They also lowered the 2019 skim-solids basis export forecast because of weaker exports of cheese and skim and nonfat dry milk. However, SMP/NDM sales for 2020 look bright. The 2020 skim-solids basis export forecast is raised.

USDA in this report pushed the Class III price higher from last month as the higher cheese price more than offsets the lower whey price. Additionally, they raised the Class IV price as the higher NDM price more than offsets the lower butter price. 

“For 2020, cheese and NDM prices are raised from the previous month, but the price forecast for butter is reduced. The whey price is unchanged. As a result, the Class III price forecast is higher, but the Class IV price is lowered, as the higher NDM price is more than offset by the lower butter price,” the report said. “The 2019 all milk price is forecast higher at $18.40; for 2020 the price is unchanged at $18.85 per cwt.”

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