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USDA raises 2019 milk price forecast slightly

Progressive Dairy Editor Dave Natzke Published on 11 July 2019

The USDA’s latest milk production forecast changed little from a month ago, but the 2019 price outlook improved slightly.

The 2019 milk production forecast was unchanged at 218.2 billion pounds. If realized, 2019 production would be up less than 0.3% from 2018 based on USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report, released July 11.

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The 2019 all-milk price was forecast at $18.20 per hundredweight (cwt), up 20 cents from last month and up $1.94 per cwt from 2018; it would be the highest annual average since the record high of $23.97 per cwt set in 2014.

The projected 2019 average cheese and nonfat dry milk prices were raised from a month ago, but those gains were partially offset by small declines in projected average butter and dry whey prices. The USDA projected the 2019 Class III milk price at $16.05 per cwt, up 15 cents from last month’s forecast and up $1.44 per cwt from 2018. The 2019 projected Class IV price was raised to $16.45 per cwt, up a nickel from last month and $2.22 per cwt more than the average in 2018.

Looking to 2020, the USDA outlook reduced the milk production forecast to 221.8 billion pounds, down about 100 million pounds from last month’s forecast based on slower expected growth in milk per cow. In part due to an extra day to leap year, the agency forecasts 2020 milk production will rise 1.6% from 2019.

Although down slightly from last month’s forecast, projected average 2020 milk prices are higher than 2019. Price forecasts for 2020 are: Class III – $16.65 per cwt, Class IV – $16.75 per cwt and all-milk – $18.85 per cwt.

USDA’s Cattle report, to be released on July 19, will provide a midyear estimate of the dairy cow inventory and producer intentions regarding retention of heifers as dairy cow replacements.

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Looking at the WASDE report’s beef and feed situation and forecast:

  • Beef cattle: The 2019 beef production forecast was reduced compared to a month ago, primarily due to lighter carcass weights and slightly lower third-quarter steer and heifer slaughter. The USDA’s Cattle report will also provide a midyear estimate of U.S. cattle inventory as well as producer intentions regarding retention of heifers for beef cow replacement. The 2019 average cattle price was projected at $115.50 per cwt, with highest prices already behind us for the year. Weakest prices are forecast in the third quarter.

  • Corn: This month’s 2019-20 U.S. corn outlook is for larger production and beginning stocks, greater feed and residual use, lower food, seed and industrial use, and increased ending stocks. The projected 2019-20 season-average corn price received by producers is $3.70 per bushel, down a dime from last month’s forecast but 10 cents higher than the 2018-19 average of $3.60 per bushel.

  • Soybeans: This month’s U.S. soybean supply and use projections for 2019-20 include lower beginning stocks, production, exports and ending stocks. The 2019-20 soybean price received by producers was forecast at $8.40 per bushel, up 15 cents from last month. Soybean meal prices are projected at $300 per ton, up $5 from last month’s forecast.

Due to planting delays and prevented planting acreage, the USDA will update corn and soybean acreage estimates in the August Crop Production report.  end mark

Dave Natzke
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