The talk of the week was China’s retaliatory tariffs against the U.S. on $60 billion of goods in response to President Donald Trump’s upping the ante by raising tariffs on imports from China.

HighGround Dairy stated that while the trade war with China is bearish to U.S. commodity prices, it believes the African Swine Fever in China is “taking a much larger toll on U.S. dairy exports rather than the existing and potentially new tariffs that may take effect next month.”

“The majority of U.S. dairy exports to China are in the form of sweet whey powder, whey permeate or lactose with recent month volumes at multi-year lows. China’s hog herd was reportedly down 10 percent into the first quarter of 2019 (or more) and the country has been unable to control the outbreak,” according to HGD.

As I briefly reported last week the Agriculture Department lowered its 2019 milk production estimate for the sixth consecutive time in the latest World Agricultural Supply and Demand Estimates report, blaming declining milk cow inventories and slow growth in milk per cow.

Production and marketings for 2019 are now estimated at 218.7 and 217.7 billion pounds respectively, down 800 million pounds on production from last month’s estimate and 900 million pounds lower on marketings. If realized, 2019 production would be up just 1.1 billion pounds or 0.5 percent from 2018.

The report provided the first preview of what is expected for 2020, projecting milk output to hit 222.7 billion pounds, which would be up 4 billion pounds from 2019.

Dairy herds are expected to expand as producers respond to higher milk prices and lower feed costs, according to the WASDE. Milk per cow is expected to continue increasing, plus the forecast reflects the one extra day due to leap year.

Cheese, butter, and nonfat dry milk prices were forecast higher than the previous year on robust demand expectations. However, the whey price forecast was slightly lower on continued softness in export demand.

The Class III milk price is forecast to increase as stronger cheese prices more than offset the weaker expected whey price. Look for a 2019 average at around $16.05 per hundredweight, up 70 cents from last month’s estimate and compares to $14.61 in 2018 and $16.17 in 2017. The 2020 average is projected at $16.55.

The Class IV price is expected to increase due to higher nonfat dry milk and butter prices. It’s projected at around $16.20, up 15 cents from last month’s projection, and compares to $14.23 in 2018 and $15.16 in 2017.

Woes continue in U.S. fluid milk sales. The latest data reports 3.9 billion pounds of packaged fluid sales in March, down 4.7 percent from March 2018. Conventional product sales totaled 3.7 billion pounds, down 4.5 percent from a year ago. Organic products, at 202 million pounds, were down a shocking 8.1 percent and represented about 5.2 percent of total sales for the month.

In politics, the Trump administration was called on last week to “correct the inequity in cheese sales opportunities between the U.S. and the European Union, given the EU’s anti-trade practice of abusing geographical indications policies to monopolize generic cheese names as a means to shut out competition.”

That was the message in a letter from the chairman of the Consortium for Common Food Names Errico Auricchio, president and founder of Belgioioso Cheese in Green Bay.

“The U.S. is an extremely profitable dairy market for the EU; we must leverage that power in correcting this deeply frustrating inequity,” Auricchio wrote. “I urge you to utilize all available tools to remedy this situation. Let us at least consider imposing the same restriction on them they do on us: require that they not sell cheeses by these names into our market, as long as we are locked out of theirs.”

The U.S. is Europe’s number one export market for cheese, totaling about $1 billion in annual sales, but the EU restricts competition from the U.S. in many cheese categories, contributing to a massive $1.6 billion U.S.-EU dairy trade deficit, the letter states.