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WASDE’s Dairy Forecast: A Closer Look

January 12, 2011

Source: USDA

The milk production estimate for 2010 and forecast for 2011 are unchanged from last month, USDA said today in its latest World Agricultural Supply and Demand Estimates (WASDE).

The January 2011 WASDE report projects 2011 U.S. milk production at 195.5 billion pounds. 2010’s estimated U.S. milk production is 192.8 billion pounds.

Ending stocks for 2010 are reduced due to expected low stocks of butter and nonfat dry milk (NDM) at the end of the year.

Imports for 2010 and 2011 are reduced due to low U.S. prices relative to international prices, coupled with a weak U.S. dollar. Skim-solids basis exports are raised as NDM exports are expected to be supported by tight world supplies into mid-2011. Fat basis exports for 2010 are lowered from last month on weaker-than-expected exports of butterfat.

Butter, NDM, and whey prices are forecast higher, but the cheese price forecast is lowered. Tighter beginning stocks support a higher butter price forecast while generally strong exports of NDM and whey will support higher prices. The cheese price forecast is reduced from last month on moderate demand.

The Class III price forecast range – at $14.35/cwt. to $15.15/cwt. -- is reduced as the lower forecast cheese price more than offsets the higher whey price forecast. The Class IV price forecast – at $14.90/cwt. to $15.80/cwt. --is raised as both the butter and NDM price forecasts are raised.

The 2011 all-milk price is forecast to average $16.10/cwt. to $16.90/cwt.

Read the full WASDE report.

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