Knowledge Exchange

Ag Economy

Dairy

  • Milk price forecasts have softened a bit for the remainder of 2019, but increased for 2020. Boston Blend pricing peaked at $18.94/cwt. in August. It is forecast to fall to $18.35 by February before beginning to climb, eventually reaching a high of $19.40 next October.
  • The USDA all-milk price forecast for 2020 is $18.85/cwt. If realized, this would be the highest all-milk price since 2014’s average price of $23.77.1
     
Price per cwt. 2017 2018 2019 Forecast 2020 Forecast
Boston Blend Price2 17.44 16.09 18.03 18.90
Avg. WNY Blend3 16.40 15.06 17.05 17.61

 

  • U.S. milk production barely increased year-over-year in August 2019, rising 0.2% from August 2018. Production gains per cow were roughly countered by a reduction in the national herd size.
  • In August, on a state-by-state basis, there were gains in production in California (1.5%), Idaho (2.9%), Michigan (1.6%), Texas (4.6%), and New York (1.1%) while many states showed decreases including Wisconsin (-0.5%), Pennsylvania (-6.0%) and Virginia (-11.4%).
  • National cow numbers decreased 0.8% year-over-year (-71,000 head). New York had an increase of 5,000 head from last year's total of 627,000.4
  • Total 2019 U.S. dairy exports through August were valued at $3.92B, a 3% y-o-y increase and the highest figure in five years, largely driven by higher world prices. Overall product volume exported was still down by 13%, y-o-y, largely due to a significant decrease in exports to China.5
  • Industry sentiment is modestly improving as milk prices trend higher. These higher prices are bringing more producers back into profitable territory, but many are still dealing with deferred maintenance, payables and erosion of cash reserves as a result of several years of depressed prices.

1 USDA WASDE, October 10, 2019
Agrimark Price Forecast
3
 Upstate Niagara Price Forecast
4
 USDA/NASS
5 U.S. Dairy Export Council