This morning’s March WASDE report projected lower milk production, reduced exports, higher imports and lower prices, including the all-milk price, which was lowered to between $14.95 and $15.55 per cwt. Despite the seemingly negative news, Nick Buyse, a dairy market analyst from FCStone, said the report was pretty neutral and probably won’t shake markets much.
Naomi Blohm of Stewart-Peterson agreed. “Typically the WASDE report has very little impact on the dairy markets,” she said.
Blohm says producers in the U.S. have gradually started cutting back on milk production due to the low milk price. While the milk production was lowered in today’s report, it was only lowered by 0.1%, which isn’t much. “That's not anything significant,” Blohm said. “I think lower production would be anticipated given the price of milk, especially if these low prices hang around for a significant period of time.”
The report also lowered the forecasted all-milk price to be in the $15 range, which Buyse said is in line with futures markets. He agreed that the strong dollar will continue to hamper U.S. cheese exports, which was also noted in the report. He also supported the WASDE forecast that NDM prices will be in a narrow, stable range throughout 2016.
Other notable highlights from the report:
- Class III milk price is lowered based on lower cheese prices.
- Class IV milk price remains unchanged.
- Imports increased on both a fat and skim-solids basis.
- Butterfat and cheese imports will remain stable.
- The butter price forecast is increased on demand strength.
Read the full WASDE meat and milk report here.