Milk price forecasts indicate higher prices in 2020. Boston Blend pricing last peaked at $19.84/cwt. in December 2019. It is forecast to fall to $19.14 for January 2020 before beginning to climb, eventually reaching a high of $19.99 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
U.S. Milk production increases in 2019 were fairly modest, helping bring production in closer alignment with demand and supporting higher prices. Production gains per-cow slightly more than compensated for a reduction in the national herd size.
On a state-by-state basis, in 2019, there were gains in production in California (0.7%), Idaho (3.1%), Michigan (1.7%), and New York (2.0%) while other states showed decreases including Indiana (-2.7%), Pennsylvania (-1.3%), and Wisconsin (-1.6%).2
National cow numbers decreased 0.3% year-over-year (-27,000 head). New York had an increase of 3,000 head from last year, at 626,000.3
Total U.S. dairy exports for 2019 through November were valued at $5.49B, a 7% 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 9%, year-over-year, largely due to a significant decrease in exports to China.
Industry sentiment is modestly improving as milk prices trend higher. These higher prices are bringing more producers back into profitable territory, but some 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
2 USDA / NASS Milk Production Report. 2019 through November.
3 USDA / NASS Milk Production Report