WASDE Milk Price Forecast Jumps Into $18's
The USDA World Agriculture Supply and Demand Estimate (WASDE) increased Class III price forecasts based on higher cheese prices and carries that price increase into 2018, again based on higher component product prices. The all milk price is forecast higher at $17.80 to $18.20 per cwt for 2017 and is increased to $18.10 to $19.10 per cwt for 2018.
Cheese, butter, and nonfat dry milk (NFDM) price forecasts are raised for both 2017 and 2018 on strong domestic and international demand and a reduced production forecast. However, whey prices are reduced from last month for 2017, but raised for 2018.
WASDE milk production forecasts for 2017 and 2018 dropped from last month as lower expected milk per cow more than offset expected gains in cow numbers.
Exports will be impacted by higher milk prices and potential demand. For 2017 and 2018, fat basis exports are reduced on the expectation that current high prices will temper export demand. On the flip side, skim-solid basis exports are raised for both years on expected strength in nonfat dry milk/ skim milk powder demand.
On the import side, WASDE raises the 2017 fat basis import forecast based on stronger imports of cheese and butterfat. But for 2018, lower expected imports of some processed dairy products more than offsets higher expected imports of cheese and butterfat, and the forecast for fat basis imports is lowered. The skim-solid basis import forecasts are unchanged.