The USDA’s December World Ag Supply and Demand Estimates (WASDE) report left milk production estimates for both 2019 and 2020 unchanged from a month ago, with expectations milk prices will increase.
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Dave Natzke
Editor / Progressive Dairy

The 2019 milk production forecast, at 218.6 billion pounds, would be up about 0.45% from 2018.

Cheese and butter price forecasts for 2019 were lowered slightly from last month; the whey price was unchanged, but the nonfat dry milk (NDM) price was raised.

Compared to a month ago, the 2019 all-milk price forecast was unchanged at $18.60 per hundredweight (cwt). The projected Class III price was cut 5 cents to $16.95 per cwt, but the Class IV price was unchanged at $16.30 per cwt.

The 2020 milk production forecast was unchanged at 222.4 billion pounds. If realized, 2020 milk production will rise about 2.6% from 2019.

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For 2020, the projected butter price was reduced on continued demand softness, but cheese prices are forecast slightly higher on stronger demand. Forecasted NDM and whey prices were raised, supported by higher expected export demand.

The 2020 forecast of both Class III ($17.65 per cwt) and Class IV ($16.95 per cwt) were raised on gains in most product prices with the exception of butter. The 2020 all-milk price forecast was raised to $19.40 per cwt, a 55-cent increase from last month’s forecast.

  • Beef outlook: The forecast for 2020 beef production was reduced from the previous month based on a slightly slower pace of both fed and non-fed cattle slaughter in the first half of the year. The cattle price forecast was raised for the fourth-quarter 2019, and that strength is expected to carry into 2020.

The 2019 average cattle price was projected at $117 per cwt, up $1 from last month’s forecast; the 2020 forecast was also raised $1 to $117 per cwt.

Crop estimates updated

  • Corn: This month’s WASDE 2019-20 U.S. corn supply and use outlook was unchanged from last month. The projected 2019-20 season-average corn price received by producers is $3.85 per bushel, unchanged from last month’s forecast and up 24 cents from the 2018-19 average price.

  • Soybeans: Soybean supply and use projections for 2019-20 were unchanged from last month. The U.S. season-average soybean price received by producers for 2019-20 was forecast at $8.85 per bushel, down 15 cents. The soybean meal price forecast was reduced $15 to $310 per ton.

  • Cottonseed: In conjunction with the WASDE report, the USDA also released a monthly Crop Production report. This month’s outlook for U.S. cotton in 2019-20 includes lower production, mainly due to a 500,000-bale decline in Texas. As a result, the 2019 cottonseed harvest was forecast at 6.266 million tons, down about 187,000 tons from last month’s forecast. Despite the downward adjustment, it would still be up about 653,000 tons from last year.

  • Dry hay: The December Crop Production report did not provide updated information related to dry hay or other forages.

November Class III price tops $20

Thanks to a surge in cheese prices and a corresponding jump in the value of protein, the Federal Milk Marketing Order (FMMO) Class III milk price moved to a 60-month high in November 2019. At $20.45 per cwt, it was up $1.73 from October and $6.01 more than November 2018. It’s the highest Class III price since November 2014.

The November 2019 Class IV milk price increase was far less dramatic, with weaker butter prices and butterfat values. At $16.60 per cwt, the November Class IV price was up 21 cents from October and $1.54 more than November 2018.

Year to date, 2019 Class III and Class IV prices now average $16.74 and $16.26 per cwt, respectively. Over the same period a year earlier, the average Class III price is up $2.05 per cwt, while the Class IV average price is up $2.11 per cwt.  end mark

Dave Natzke