Milk Production Forecast Climbs Nearly 4 Billion Pounds over 2019
Published: Friday, March 20, 2020
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Week-ly."
The Agriculture Department raised its 2020 milk production forecast in the latest World Agricultural Supply and Demand Estimates report, based on a higher expected cow inventory.
2020 production and mar-ketings were estimated at 222.3 and 221.2 billion pounds, respectively, up 300 million pounds on production and 200 million on marketings. If realized, 2020 production would be up 3.9 billion pounds, or 1.8 percent, from 2019.
The 2020 fat basis import forecast was raised from the previous month on recent trade data and strong-er anticipated imports of cheese and butterfat products. The fat basis export forecast was reduced on slower ex-pected demand in the first half of the year.
The skim-solids basis import forecast was raised on stronger im-ports of cheese, milk proteins and other dairy products. The skim-solids basis export forecast was raised on expecta-tions of continued strength in international demand. Annual product price forecasts for cheese, butter and nonfat dry milk (NDM) were lowered, but the whey price forecast was raised.
The Class 3 milk price estimate was re-duced on the lower cheese price forecast and is now projected to average $16.65 per hundredweight, down 30 cents from last month's estimate, and compares to $16.96 in 2019 and $14.61 in 2018.
The Class 4 price was re-duced on lower butter and NDM price forecasts and is expected to average $15.75, down 95 cents from last month's projection and compares to $16.30 in 2019 and $14.23 in 2018.
This month's 2019-20 U.S. corn supply and use outlook is unchanged relative to last month. The season-average corn price received by producers was lowered 5 cents to $3.80 per bushel based on observed prices to date. Global coarse grain production was virtually unchanged from last month at 1.4 million tons.
Soybean supply and use projections were mostly unchanged. With soybean crush and exports projected at 2.1 billion bushels and 1.8 billion bushels, respectively, ending stocks re-main at 425 million bushels, down 484 million from last year's record. Soybean and soybean oil prices were re-duced this month.
The U.S. season-average soybean price is now projected at $8.70 per bushel, down 5 cents. The soybean oil price is projected at 31.5 cents per pound, down 2 cents. Soybean meal prices were unchanged at $305 per ton. This month's global oilseed outlook includes higher production and stocks relative to last month. Global soybean production was raised 2.4 million tons to 341.8 million.
Cheddar block cheese closed "Friday the 13th" at $1.8725 per pound, up 12.25 cents on the week and 31.25 cents above a year ago. The barrels fell to $1.41 on Monday, lowest price in 12 months, but finished last Friday at $1.50, up 2.25 cents on the week, 75 cents above a year ago, but at an enlarged 37.25 cents below the blocks. Four cars of block were traded on the week at the CME and 24 of barrel.
Midwestern cheese producers report generally steady, if not tepid, cheese demand, according to Dairy Market News, and some say coronavirus issues are not directly affecting cheese makers. There are concerns and or expectations of food service requests lessening but retail demand could improve, as more people are staying home. Cheese inventory ranges from growing to long. Milk is available and the volume of offers has increased, but the mid-week price range was similar to previous weeks. Cheese market tones are far from steady, says DMN.
Western cheese makers say demand has been steady. Retail orders are strong, but food service has been a bit slower. With an abundance of milk, cheese plants are running near full capacity.
Butter lost 3.75 cents on Monday and closed last Friday at $1.8125, down 4.25 cents on the week and 46.75 cents below a year ago, with nine cars sold on the week.
Butter producers report more promising demand tones and spring holiday demand expectations are beginning to come to fruition. Butter production is moderate to busy, depending on the producer and the region. Cream is still readily available but ice cream production increases have begun to claim some of that cream. Butter markets have seen improvements however coronavirus has most DMN contacts questioning expectations of all markets, including butter.
Price erosion returned to nonfat dry milk which saw a fair amount of product head to Chicago. It fell to $1.05 per pound last Thursday, lowest since Sept. 11, 2019. It closed at $1.0525, down 6.25 cents on the week but still 8.5 cents above a year ago. Forty-seven loads traded hands on the week, up from 38 the previous week.
CME dry whey closed last Friday at 34.75 cents per pound, unchanged on the week but 2.75 cents above a year ago, with six sales reported at the CME.
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