USDA Projects Higher Class III, Slipping Class IV 2021 Milk Prices
November 10, 2020
In their November World Agricultural Supply and Demand Estimates report on Tuesday, USDA bumped milk production forecasts for 2020 and 2021 higher on stronger growth in milk per cow and higher expected dairy cow inventory.
USDA raised the 2020 fat basis import forecast due to recent trade data and higher expected imports of cheese and butterfat products in the fourth quarter. This strength is expected to carry into 2021 supporting a higher 2021 fat basis import forecast. The fat basis export forecast for 2020 is raised on higher expected exports of cheese and butterfat; no change is made to the 2021 fat basis export forecast.
USDA’s skim-solids basis import forecast for 2020 is reduced on lower imports of low-fat milk powders while the 2021 import forecast is reduced on lower imports of a number of dairy products. The 2020 and 2021 skim-solids basis export forecasts are raised on stronger expected sales of skim milk powder.
Cheese, nonfat dry milk (NDM), and whey price forecasts for 2020 are raised from last month on strength in demand. The butter price forecast for 2020 is reduced on current and expected continued weakness in prices. Therefore the 2020 Class III price forecast is raised on higher prices for cheese and whey. The Class IV price forecast is unchanged from last month as the higher NDM price offsets the lower butter price.
The 2020 all-milk price forecast is raised to $18.25 per cwt.
For 2021, cheese, NDM, and whey USDA price forecasts are raised on continued strength in demand. The butter price forecast is reduced on lower expected prices through the first part of the year. The 2021 Class III price forecast is raised on higher forecast prices for cheese and whey. However, the Class IV price forecast is reduced as the lowered butter price more than offsets the increase in NDM. The all milk price forecast for 2021 is raised to $17.70 per cwt.