2018 Milk production forecast raised in World Agricultural Supply and Demand Estimates report - Cowsmo

2018 Milk production forecast raised in World Agricultural Supply and Demand Estimates report

The Agriculture Department raised its 2018 milk production forecast in the latest World Agricultural Supply and Demand Estimates report, based on more rapid growth in milk per cow in the first half of the year. 2018 production and marketings were projected at 219 and 218 billion pounds, respectively, up 300 million pounds from last month. If realized, 2018 production would be up 3.5 billion pounds, or 1.6 percent, from 2017.

The 2018 imports on a fat and skim-solids basis were reduced on slower sales of a number of processed dairy products. Exports on a fat basis were raised on increased cheese sales, and exports on a skim-solids basis were raised on stronger sales of both cheese and whey products.

Annual product price forecasts for cheese and butter were raised from the previous month as recent prices have increased. However, continued large supplies of nonfat dry milk are expected to pressure NDM prices, and the forecast was reduced. No change was made to the annual whey price forecast.

The Class III milk price was raised on the cheese price projection, while the Class IV price is down, as the lower NDM price more than offset a higher butter price forecast.

The 2018 Class III milk price forecast is projected to range $14.30-$14.90 per hundredweight, up a dime on the low end from last month’s estimate. The Class III averaged $16.17 in 2017 and $14.87 in 2016. The Class IV price is expected to range $13.25-$13.95 per hundredweight, down a dime on the low end and 20 cents lower on the high end, and compares to $15.16 in 2017 and $13.77 in 2016.

Dairy Market News reports that spot milk into Midwestern cheese plants is ranging $2 to $3 under Class, with some as low as $5 under. It adds that “hauling woes, whether systemic or weather-related, continue to plague a number of cheese producers in the region and veritably across the nation.

“Milk shipments were delayed early in the week, while mozzarella and provolone producers, currently reporting steady demand, are concerned about multiple winter storms affecting orders made by Eastern region customers. Hard Italian orders are trending up, while barrel producers report demand as middling. The cheese markets are exhibiting bullish traits. Nevertheless, cheese contacts have seen positive, short-term signs in the recent past, only to be beguiled by the somewhat delusive cheese markets.”

Dairy margins were mixed over the second half of February but generally weaker following a continued advance in corn and soybean meal prices, while the milk market held relatively steady, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.

“Margins still remain negative through the first half of 2018 and well below average from a historical perspective,” the MW states, “while projected positive but only just above breakeven through the second half of the year. Milk prices have held steady over the past couple weeks but remain depressed due to heavy milk production and stocks.

Like it or not, the U.S. dairy market remains globally driven, and one of the key players is China. Jerry Dryer, analyst and editor of the Dairy and Food Market Analyst newsletter, reported on China’s January dairy appetite in the March 5 Dairy Radio Now interview.

Dryer called it “pretty phenomenal,” as China imported record volumes of almost everything. He said China set a new monthly record on skim milk powder imports and whole milk powder, cheese and infant formula. Whey protein was the only exception, according to Dryer, but it still saw the second highest import level ever, “so the hungry giant appears to have awoken again.”

Part of the reason is that China’s domestic milk production is lagging from a year ago, according to Dryer, who said that December nonfat dry milk output was down about 20 percent.

The U.S. is down the list of China’s suppliers, but “we are making headway,” he said, and the U.S. has always been a significant supplier of whey powder to China. January was a good example. China imported 50,000 metric tons of it, and 18,000 of that came from the U.S., or about two fifths, according to Dryer.

He admitted that U.S. exports of nonfat dry milk to China have fallen some. The U.S. exported about 72 million pounds of powder in 2017, or about a 14 percent share. But the last time China had this “raging appetite,” the U.S. had a 26 percent market share, he said.

“If this appetite continues to build, it’s positive news for us because New Zealand, China’s steadfast supplier, is having some production problems so they may need to turn to us again for more skim milk powder.”

Interestingly, the DFMA also reports that Russia will temporarily ban imports of some dairy products from Belarus. “The agency claims food safety problems, but the reality is the government is protecting its less competitive domestic industry and is also targeting dairy products that are being trans-shipped through Belarus from other suppliers, including the European Union.”


Source: The Country Today

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