Knowledge Exchange

Ag Economy

Dairy

  • Milk price forecasts have been more bullish recently. Boston Blend pricing has steadily climbed through the first half of the year, coming in at $18.28/cwt. for June. It is forecast to continue to climb through October, reaching $19.53 before backing off slightly in November and December.
  • Looking further ahead, the USDA all-milk price forecast for 2020 is $18.80/cwt. If realized, this would be the highest all-milk price since 2014’s average price of $23.77.
Price per cwt. 2016 2017 2018 2019 Forecast
Boston Blend Price1 15.90 17.44 16.09 18.25
Avg. WNY Blend2 14.84 16.40 15.06 17.33
  • USDA milk production estimates for 2019 have been lowered recently, which is supportive of milk prices, as supply comes in closer alignment with demand. Monthly milk production has been basically flat from 2018, with April’s production revised upward to 0.3% greater, and May production 0.4% lower. A reduction in the national herd size has more-or-less countered per-cow productivity gains.
  • On a state-by-state basis, in May, there were gains in production in California (1.3%), Idaho (1.4%), Michigan (0.4%), Texas (5.4%), and New York (1.0%) while many states showed decreases including Wisconsin (-0.4%), Pennsylvania (-7.0%), and Virginia (-10.1%).
  • National cow numbers decreased 0.9% year-over-year (-89,000 head). New York had an increase of 3,000 head from last year, at 627,000.3 Total U.S. dairy exports in May were valued at $539 million, a 6% y-o-y increase, largely driven by higher world prices, and increased cheese export volume. Overall product volume exported was still down by 13%, y-o-y, largely due to a 67% decrease in exports to China. Dry whey sales to China were the lowest in 11 years, down 83%.4 With tightening supplies among global dairy exporters, US exports are expected to continue to climb through 2020.5 A resolution of trade disputes with China could boost exports further.
  • Signups for the new Dairy Margin Coverage program (DMC) are now open through September. Signups are retroactive to the beginning of the year, and positive payouts are virtually guaranteed for farms that sign up for the program. Producers can simultaneously enroll in DMC and crop insurance programs, broadening their risk management options.

1 Agrimark Price Forecast
2 Upstate Niagara Price Forecast
3 USDA/NASS
4 U.S. Dairy Export Council
5 USDA / ERS Livestock, Dairy and Poultry Outlook: May 2019