June 12, 2018

WASDE Suggests Higher Milk Prices Despite Mexican Cheese Tariffs

 |  By: Anna-Lisa Laca

In its Tuesday World Agriculture Supply and Demand Estimates (WASDE) report, USDA forecasted milk prices to move higher during the remainder of 2018 and into 2019.

“For 2018, the Class III price is raised on the stronger whey price. The Class IV price forecast reflects higher butter and NDM prices,” the report says. “For 2019, both Class III and Class IV prices are raised. The all milk price is forecast higher at $16.60 to $17.00 per cwt for 2018 and is increased to $16.70 to $17.70 per cwt for 2019.”

USDA lowered the milk production forecast for both 2018 and 2019 in the report sighting lower cow numbers and slower growth in milk per cow than expected. For the remainder of 2018, the agency thinks fat basis exports will increase and the continued “strength in sales” of a number of “fat-containing” products will mitigate the impacts of Mexico’s tariffs on U.S. cheese. 

“For 2019, the fat basis export forecast is lowered. Skim-solids basis export forecasts for 2018 and 2019 are raised from the previous month on robust demand for non-fat dry milk and lactose thus far in 2018, and this strength is expected to carry into 2019,” USDA says. “Fat basis imports for 2018 and 2019 are raised on higher imports of butterfat products, while skim-solids basis import forecasts for 2018 and 2019 are reduced on lower imports of milk proteins and a number of other dairy products.”

Furthermore, USDA did not change the 2018 cheese price but did increase it for 2019. Nonfat dry milk and whey prices are expected to improve throughout the remainder of 2018 and into 2019, the result of both strong demand and reduced production. 

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