USDA Milk Price Projections Slightly Reduced

November 10, 2015 03:25 PM
USDA Milk Price Projections Slightly Reduced

While the USDA’s WASDE reports tend to make ripples in the grain markets, the dairy sector is usually not drastically affected and that’s no different this month. While USDA reports the cow herd has declined leading to less production, keep in mind it’s only been reduced by 0.05%, a fairly insignificant number according Kyle Schrad, a dairy markets analyst and risk management consultant with FCStone LLC.

Schrad says farmers shouldn’t pay as much attention to the reduced production estimate as the price adjustments reflected in the reports.

“Typically the WASDE reports don’t do much for dairy markets,” he says.  “This time they are basically revamping prices, for the most part slightly lower, and I think that’s in line with what the market expected.”

Another slight reduction for cheese and butter prices for 2016 is due to the anticipation the U.S. might not export as much cheese and butter next year as hoped.

“Largely uncompetitive prices are likely to limit growth in export sales of butter and to a lesser extent, cheese in 2016, and fat-based exports are reduced,” USDA officials included in the report.

Our inability to export large amounts of fat-based products shouldn’t come as a shock according to Schrad.

“Currently our prices are still carrying a premium versus the international market place which means we aren’t going to export much cheese,” he says.

Supplies continue to grow in the U.S. also adding to the reduced price according to USDA. As milk production shifts from California to the upper Midwest Schrad says cheese production will continue to grow because there happen to be a lot of cheese plants in the area. He doesn’t except the price to improve drastically any time soon.

“As long as we aren’t exporting much cheese and we’re making more of it we can expect the price to be lower,” he says.  

USDA’s report also notes the current high domestic demand for butter will help carry a strong price through the end of 2015 but supplies do not support a good price into 2016. Schrad says the butter market does this each year around the holidays as we experience a seasonal increase in demand causing tight supply.

“When there’s a tightness in the market place, that allows for prices to move pretty high with very few trades,” he says. “Once we get through the holiday demand period I would expect that we see a very sharp pull back.”

USDA’s report also noted the increase in the 2015 all milk price to $17.00 to $17.10. The increase is likely a result of the recent rally in Class IV price but Schrad admits it’s “a bit surprising to see them raise it this late in the game.”

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Spell Check

Senior PA Dairy Farmer
Westfield, PA
11/13/2015 08:27 PM

  More brainwashing propaganda passed off as "dairy policy" to justify another round of ripping off dairy farmers. Always talk of "dairy markets." Should be pegged “DIRTY” markets! No mention of dairy FARMER “cost of production” at the farm or just how these criminal, chronically low milk prices are really affecting the farming families---owners and workers---or the farm support businesses, for that matter, which are themselves awash in red ink, dependent as they are on how the farmer fares. Lots and lots of bills are not paid on time, and missed opportunities for input and capital purchases are the norm because of insufficient “cash-flow.” Glaring rampant "market" CORRUPTION abounds unabated. The dairy "industry” (you know, milk procurement and marketing and processing and check off ad beneficiaries and product development and innovation and retail and trade and investment, etc.--- all the parasitic entities) reaps obscene financial profits at the expense of working farmers. The rigged federal minimum milk pricing FORMULA in place since 2000 is an additional reflection of the dirty POLITICS at work in DC and in the co-ops! How's Congress’s Farm Bill USDA MPP-Dairy “safety net” working out for you? All farmers/ranchers need to be able to cover what it costs to produce the "commodity" ON THE FARM/RANCH before it moves into the “market.” This is common sense for a nation to retain an independent, sovereign food supply produced on stable farms that circulate money into the LOCAL rural economy BEFORE any money leaves the community. Predatory speculators now control the New World Order dairy "markets" leaving dairy farming communities in ruin. Dairy farmers need to brace themselves for the skewering in the works as the global “marketers” prepare to serve up a new round of dairy farmer heads on the TPP platter they are hell-bent on bringing home.

Standish, MI
11/12/2015 08:33 AM

  It doesn't matter what WASDE report says milk markets are same as oil markets totally manipulated for the survivability of the largest producers, 2009 the economic pain stifled production, after record prices of 2014, and unprecedented milk dumpings in 15, there is no economic pain only market manipulations and continued expansion, the chickens will come home to roost eventually under the weight of bulging supplies.

westfield, WI
11/13/2015 03:10 PM

  its all b.s any way. you here about a surplus and the farmers prices drop. you don't here about ANY other business in the united states telling their employees that because of a surplus of unemployed people your wages have to drop. only the farmer heres about that


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