WASDE: Higher Milk Prices Ahead
In their May World Agriculture Supply and Demand Estimates (WASDE) report, USDA announced both a higher price forecast for 2018 and 2019.
USDA expects 2019 milk production to be slightly higher on gradual recovery in milk per cow. However, cow numbers are expected to remain near 2018 levels. The Agency expects commercial exports on both a fat and skim-solids basis to increase due to robust global demand.
“With stronger expected domestic and export demand, cheese, nonfat dry milk (NDM), and whey prices are forecast higher for 2019. Butter prices are forecast slightly lower,” the report says.
As a result, USDA is forecasting higher Class III prices based on stronger cheese and whey prices and higher Class IV prices as the stronger NDM price more than offsets the lower butter price.
The 2019 all milk price is forecast at $16.25 to $17.25 per cwt, slightly higher than 2018. The 2018 all milk price is increased to $16.20 to $16.70 per cwt.