WASDE Price Forecasts Stay Flat
The USDA World Agriculture Supply and Demand Estimate (WASDE) raised the milk production forecast for 2017 from last month based on more cows and higher production per cow. Improved returns in 2017 are expected to result in a slightly higher cow inventory during the late part of 2017. Milk output per cow is also raised as improved returns are expected to support continued improvements in the quality of dairy rations.
Beginning stocks on both a fat and skim-solids basis are raised from last month on December 31 storage data; forecasted stocks at the end of 2017 are raised, reflecting increased beginning inventories and higher dairy product production in 2017.
Cheese and butter price forecasts are lowered as production is expected to reflect higher milk supply, and beginning stocks are already relatively high. The nonfat dry milk price forecast is unchanged, but the whey price is raised from last month on the strength of domestic and international demand. The Class III price is raised as the higher whey price more than offsets the lower cheese price forecast. The Class IV price is reduced as the butter price forecast is lowered. The all milk price is forecast basically flat at $17.70 to $18.40 per cwt, compared to the January forecast of $17.60 to $18.40.