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Dairy Production and Prices Expected to Stay Flat to Lower

The USDA has reduced its milk production forecast for this year and next because of slower expected milk per cow and a smaller herd.


In its August supply and demand report, USDA forecast 2019 cheese, butter, and whey prices higher while nonfat dry milk prices were lowered because of slowing demand.  Whey prices were unchanged for 2020 while cheese, butter, and nonfat dry milk were lowered.


The 2019 Class III price was raised on higher cheese and whey prices. The Class IV price was lowered as lower nonfat dry milk prices more than offset higher butter prices.  The 2020 Class III and IV prices were lowered on weaker product prices.


The 2019 all milk price increased a dime to $18.30 but was lowered a nickel to $18.80 for 2020. 


Exports on a skim-solids basis exports were lowered because of expected reduced sales of nonfat dry milk; fat basis exports were also reduced.  Slowing sales of butterfat reduced the 2020 fat basis exports.  Skim-solids basis exports were also lowered because of weak demand for nonfat dry milk and increasing global competition.