Milk Production to Remain Steady
Published: Friday, December 20, 2019
The following is from Lee Mielke, author of a dairy market column known as "Mielke Market Weekly."
The Agriculture Department left unchanged its milk production forecasts for 2019 and 2020 in the latest World Agricultural Supply and Demand Estimates.
2019 milk production remains estimated at 218.6 billion pounds while 2019 marketings was raised 100 million pounds from last month's report. If realized, 2019 production would be up 1 billion pounds, or .5 percent, from 2018.
2020 production and marketings remain estimated at 222.4 and 221.4 billion pounds, respectively. If realized, 2020 production would be up 3.8 billion pounds, or 1.7 percent, from 2019.
Cheese and butter price forecasts for 2019 were lowered, the nonfat dry milk (NDM) price was raised, and the whey price was unchanged. The 2020 butter price forecast was reduced on continued demand softness, but cheese prices were forecast slightly higher on stronger demand. NDM and whey prices were raised, supported by higher expected export demand.
The 2019 Class III milk price forecast was lowered due to an expected weaker cheese price. The 2019 average was projected at $16.95 per hundredweight, down a nickel from last month's estimate and compares to 2018's average at $14.61 and $16.17 in 2017. The 2020 average was raised 15 cents to $17.65.
The Class IV price was unchanged from last month as the lower butter price was offset by a higher NDM price. Look for the Class IV to average $16.30 in 2019, up from the 2018 average of $14.23 and $15.16 in 2017. The 2020 Class IV average was raised a dollar to $16.95. The increased 2020 Class III and IV prices are due to gains in most product prices with the exception of butter.
This month's 2019-20 U.S. corn supply and use outlook was unchanged from last month. The projected season-average farm price was unchanged at $3.85 per bushel. Global coarse grain production for 2019-20 was forecast 6.8 million tons higher to 1.4 billion. The 2019-20 foreign coarse grain outlook is for larger production, increased consumption and higher stocks relative to last month. Foreign corn production was forecast higher, with increases for China and Bolivia more than offsetting a reduction for Canada, according to the USDA.
U.S. oilseed production was forecast at 107.6 million tons, down slightly due to a decrease for cottonseed. Soybean supply and use projections were unchanged from last month. The U.S. season-average soybean price for 2019-20 was forecast at $8.85 per bushel, down 15 cents.
The soybean meal price forecast was reduced $15 to $310 per short ton. The soybean oil price forecast was unchanged at 31 cents per pound. Global oilseed production was forecast up 3.3 million tons to 574.6 million, with greater soybean, sunflower seed and peanut production partly offset with lower rapeseed and cottonseed forecasts. China's soybean production projection was raised 1 million tons to 18.1 million reflecting higher area and yield.
The month's U.S. cotton outlook included lower production and ending stocks compared with last month. Production was lowered 611,000 bales mainly due to a 500,000-bale decline in Texas. Domestic mill use and exports are unchanged.
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