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December 9, 2016

WASDE Lowers Milk Production, Increases Price Forecasts

 |  By: Anna-Lisa Laca

The December World Agriculture Supply and Demand Estimate (WASDE) USDA lowered milk production forecasts for both 2016 and 2017, but increased milk price forecasts. The agency says slower growth in cow numbers more than offsets more milk being produced per cow.

Price forecasts are positive for all dairy products for 2016 and 2017. All milk prices are forecast higher at $16.05 to $16.15 per cwt for 2016 and $16.85 to $17.65 per cwt for 2017.

“As a result of the higher cheese and butter price forecasts, Class III and Class IV price forecasts are raised for 2016. Class III and IV prices are forecast higher for 2017 on higher component product prices,” the agency says.

 Fat basis exports are raised for 2016 but lowered for 2017. The agency expects increased competition in cheese markets. However, they say strength in lactose and nonfat dry milk exports will support an increase in skim-solids basis exports.