meta Dairy Situation and Outlook – Cropp 3/20/17 :: The Bullvine - The Dairy Information You Want To Know When You Need It

Dairy Situation and Outlook – Cropp 3/20/17


Dairy product prices have declined during March with the exception of butter and dry whey. Butter has remained well above $2.00 per pound ranging from $2.2325 to $2.11 and is now $2.13. Dry whey has held steady in the $0.48 to $0.50 pound range. But, 40 – pound cheddar blocks started the month at $1.49 per pound, fell to a low of $1.36 and is now $1.40 25 . The cheddar barrel price started the month at $1.465 per pound, fell to a low of $1.35 and is now $1.36. Nonfat dry milk which was in the $90’s in February has been in the $0.80 to $0.81 range during March. With lower cheese prices the March Class III price will be near $15.70, down from $16.88 in February. While butter prices have held the lower nonfat dry milk price will push the March Class IV price to about $14.40, down from $15.59 in February.
 
Rather strong milk production at 2.5% higher than a year ago in January and 2. 3% higher in February, adjusted for leap year last year, has increased dairy product production and dairy stocks. Compared to a year ago, January production of butter was 1.2% higher, cheddar cheese production 3.5% higher, total cheese production 3.7% higher and nonfat dry milk production 13.1% higher. January 31st butter stocks were 16.1% higher than 2016 and 49.8% higher than 2015. Total cheese stocks were 4.6% higher than 2016 and 17.6% higher than 2015. Nonfat dry milk stocks were 1.1% higher than 2016 and 12.1% higher than 2015.
 
Butter and cheese sales have soften as buyers are not building inventories and waiting to see if prices fall further. Fluid (beverage) milk sales continue their downward trend. Fluid sales declined 0.7% last year and January sales this year were 0.8% lower than last year. Dairy exports continue to improve.
January exports compared to a year ago were up 13% for nonfat dry milk/skim milk powder, 3% for cheese, 24% for total whey products and 1% for lactose. Butter exports however were 26% lower.
 
The 2.3% increase in February milk production over a year ago was due to 56,000 more cows, an increase of 0.6% and 1.7% more milk per cow. Compared to a year ago and adjusted for leap year last year February milk production continue lower for California, down 2.0%, with increased of 0.8% for Idaho, 11.6% for New Mexico, 16.4% for Texas, 3.8% for New York, 4.8% for Michigan ,2.9% for Minnesota, 4.6% for Iowa, 1.3% for Wisconsin, and 4.6% for South Dakota. The relative strong production increases in New York, Michigan and even New Mexico is making it difficult to find enough plant capacity to handle all of the milk. Some milk has been dumped or in the case of New Mexico fed to calves.
 
Milk production will increase during the spring flush and likely will push milk prices lower. We can expect the Class III price to be in the low $15’s and the Class IV price in the low $14’s for the months of April and May. But, with continued favorable butter and cheese sales along with continued improvement of dairy exports milk prices should trend back upward after that. The Class III price could be back to the $16’s by June and reaching into the high $17’s by fourth quarter. The Class IV price could reach the $15’s by June and the higher $15’s by fourth quarter. Currently, dairy futures are not that optimistic. Class III futures don’t reach the $16’s until July and stay well below the $17’s for the remainder of the year. Class IV futures don’t reach the $15’s until August.
 
As we move ahead we will get a better since of how domestic sales, milk production and exports will turn out in 2017. Any change in these factors could result in quite different milk prices. USDA is forecasting a 2.4% increase in milk production for 2017 from 52,000 more cows, an increase of 0.6% and 410 more pounds of milk per cow, an increase of 1.8%. This is a lot of milk. Good domestic sales and continued improved exports will be necessary to reach the high $17’s for Class III and high $15’s for Class IV.
 
Source: UW Madison
 

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