USDA Raises 2017 Forecasts for Milk Production, Class III Price

The Agriculture Department again lowered its milk production forecasts for 2016 and 2017 from a month ago in its latest World Agricultural Supply and Demand Estimates report, "as slower growth in cow numbers more than offset slightly higher growth in milk per cow." By Lee Mielke.
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The Agriculture Department again lowered its milk production forecasts for 2016 and 2017 from a month ago in its latest World Agricultural Supply and Demand Estimates report, «as slower growth in cow numbers more than offset slightly higher growth in milk per cow.»
2016 production and marketings were projected at 212.4 and 211.5 billion pounds, respectively, down 100 million pounds from last month’s report on production. If realized, 2016 production would be up 3.8 billion pounds, or 1.8 percent, from 2015.
2017 production and marketings were projected at 216.8 and 215.9 billion pounds, respectively, down 200 million pounds on production and down 100 million pounds on marketings from last month. If realized, 2017 production would be up 4.4 billion pounds, or 2.1 percent, from 2016.
«Fat basis exports were raised for 2016 on higher butter exports, and skim-solids basis exports were increased on stronger sales of lactose. Fat basis exports for 2017 were reduced on expected increased competition in cheese markets, but strength in lactose and nonfat dry milk (NDM) exports are expected to support higher skim-solids basis exports.»
«Import forecasts were lowered from last month for both fat and skim-solids bases. Fat basis ending stock forecasts for 2016 and 2017 were raised on higher expected cheese stocks. Although the skim-solids basis ending stock forecast for 2016 was raised on higher-than-expected cheese and NDM stocks, the forecast for 2017 was unchanged as robust NDM exports are expected to draw down stocks during the year.»
«Price forecasts for cheese and butter were raised for 2016 on current price strength, but forecasts for NDM and whey prices were unchanged. Product prices were forecast higher for 2017 as domestic demand strength is expected to carry into next year and higher export demand is expected to support NDM and whey prices.»
Higher Prices Ahead
As a result of the higher cheese and butter price forecasts, Class III and Class IV milk price forecasts were raised for 2016 and 2017. Look for the 2016 Class III to average $14.75 to $14.85 per hundredweight, up a nickel from last month’s report, and compares to $15.80 in 2015 and $22.34 in 2014. The 2017 Class III average was raised to $15.85 to $16.65 per hundredweight, up 45-55 cents from a month ago.
The Class IV milk price is now forecast at $13.65 to $13.85 per hundredweight, up a dime from last month’s projection and compares to $14.35 in 2015 and $22.09 in 2014. Look for a 2017 average of $14.20 to $15.10, up 55-65 cents from a month ago.
As it always does, USDA’s monthly Livestock, Dairy and Poultry Outlook, issued last Thursday, echoed projections contained in the WASDE report. The Outlook reports, «Based on recent data, the fourth quarter forecast for number of milk cows is 9.335 million head, 10,000 fewer than last month’s forecast. Milk per cow in the fourth quarter was forecast 5 pounds higher, at 5,620 pounds per head.»
«Small changes have been made in feed price forecasts from last month. The corn price forecast for 2016-17 is $3.05 to $3.65 per bushel, an increase of a nickel on both ends of the range. The soybean meal forecast was unchanged at $305 to $345 per short ton. The alfalfa hay price decreased from $137 to $135 per short ton from September to October. Based on recent data, the milk cow estimate for the year has been reduced to 9.36 million head, 10,000 less than forecast last month. Milk per cow for the first quarter is forecast 10 pounds higher but is unchanged for the remainder of 2017.»
Price strength returned to the CME the second week of December despite plenty of product making its way to Chicago. The Cheddar blocks, after three weeks of decline, closed the week at $1.80 per pound, up 9 cents on the week and 36 cents above a year ago. The barrels closed last Friday at $1.70, up 12¼ cents on the week, 25 cents above a year ago, but an unsustainable 10 cents below the blocks. Twenty-three cars of block traded hands on the week and 30 of barrel.
Cheese Orders Pouring In
Midwestern cheese makers report orders are still strong, according to Dairy Market News. Some manufacturers say they are slightly behind on orders or have been able to draw down on stocks. Inventories for barrels remain a little long. Some barrel manufacturers suggest they have sold a few loads of milk to bottling operations in lieu of making more barrel cheese. These manufacturers are hopeful that the spread between barrel and block prices will narrow and improve the economics. Milk supplies are generally well balanced right now and extra spot loads are not widely offered, according to DMN.
Western cheese makers continue to fill holiday orders and some additional block demand. Domestic retail demand is solid. Cheese production is active with good volumes of milk flowing into the vats. Block manufacturing is in good balance with demand. Inventories are steady but barrel cheese is a little long, with some processors selling barrels at sizeable discounts to published prices.
Spot butter, after dropping 12 cents the previous week, closed last Friday at $2.19 per pound, up 12½ cents on the week and 13 cents above a year ago, with six cars sold on the week. The market jumped 9½ cents last Friday morning alone.
Most of holiday butter production has been finished in the Central Region, according to DMN. Cream availability for churning is higher as cream loads moving into Class II are waning. However, churners are not eager to buy spot loads, as internal cream supplies are adequate. Inventories are starting to build into cold storage. Requests from retailers are lower, but are generally steady from food service.
Western butter output is steady. Cream is more readily available as Class II manufacturers wind down ahead of the holiday season. Domestic butter demand is solid. Although manufacturers expect it to ease back a bit over the winter holidays, some suggest demand may stay seasonally strong for some time. There has also been relatively good international demand for butter. Many contacts are eager to see how much inventories have changed in the last month when cold storage numbers are reported on Dec. 23.
Cash Grade A nonfat dry milk finished the week at $1.02 per pound, 4¾ cents above the previous week and 24 cents above a year ago, with 28 cars sold.
Exports Picking Up
October U.S. export data had some encouragement. HighGround Dairy’s analysis reported that «China’s appetite for whey products continues to aid U.S. exports, with both whey protein concentrate categories at record levels.»
However, «While total cheese export volumes experienced an impressive uptick from prior month, Cheddar cheese shipments have contracted from the prior year for 26 straight months.»
HGD reports, «The massive uptick in butter exports were shipped to Canada, 2,275 metric tons (MT), up 797 percent year-over-year, and hint toward the Canadian Dairy Commission underestimating demand into fourth quarter and creating a domestic shortage.»
HGD adds, «Not only were butter sales sharply higher, but cream exports took enough product away from the churn to drive U.S. butter prices higher into the holidays. In addition, nonfat dry milk (NFDM), whey protein, and lactose exports continue outperforming versus the prior year as Asia has picked back up their interest for U.S. product with their primary dairy trade partners, New Zealand and Australia, finding themselves short of milk.»
«Skim milk powder exports sales reached fresh highs for 2016 and were the highest since May 2015 due to demand from Southeast Asia and Mexico,» according to HGD. «Export volumes improved across the U.S. dairy sector from ingredients to butterfat. The only area of concern remains Cheddar cheese as competition from Oceania and the EU continue to grow.»
«Oceania Cheddar accounted for 58 percent of Japan’s imports so far this year while the U.S. market share dropped to 11 percent versus 18 percent in 2015 and 27 percent in 2014. South Korea’s Cheddar imports have halved from the U.S., down 54 percent year-to-date, January to October, while imports from Oceania were up 19 percent year-to-date,» HGD reports.
«The outlook for U.S. exports in the coming months looks bright as the rest of the world struggles to produce incremental milk,» HGD concludes. «If domestic and Mexican demand for dairy products remain firm, it could provide serious price support in 2017.»
Source: Farmers Exchange

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Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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