USDA Forecasts Lower Milk Production, Higher Prices

In the World Agricultural Supply and Demand Estimates (WASDE) issued on Dec. 9 by USDA, the milk production forecasts are projected lower for 2021 and 2022 on lower expected dairy cow numbers and slower growth in milk per cow.

Butter, cheese, and whey price forecasts for 2021 are raised from last month on current prices and strength in demand. The nonfat dry milk (NDM) price forecast for 2021 is WASDE-619-5 unchanged. The 2021 Class III price forecast is raised on higher cheese and whey prices and the Class IV price forecast is raised on the higher butter price. The 2021 all milk price forecast is raised to $18.60 per cwt. For 2022, cheese, butter, NDM, and whey price forecasts are raised on lower expected milk supplies. Class III and Class IV price forecasts for 2022 are raised on higher forecast dairy product prices. The all milk price for 2022 is raised to $20.75 per cwt.

The 2021 fat basis import forecast is raised on higher imports of cheese and butterfat products while the export forecast is lowered on weaker sales of butterfat products. The 2021 skim-solids basis import forecast is unchanged, but the export forecast is raised on stronger global demand for lactose. For 2022, the fat basis and skim solid import forecasts are unchanged. The fat basis export forecast is raised due to stronger shipments of butterfat. The skim-solids basis export forecast is raised on larger shipments of lactose and other dairy products.