The U.S. Department of Agriculture lowered its 2019 and 2020 milk production estimates in the latest World Agricultural Supply and Demand Estimates report based on expectations of a smaller dairy herd and slower growth in milk per cow.
2019 production and marketings were estimated at 217.9 and 216.9 billion pounds respectively, down 300 million pounds from last month’s estimate. If realized, 2019 production would be up just 300 million pounds or 0.1 percent from 2018.
2020 production and marketings were estimated at 221.4 and 220.3 billion pounds respectively, down 400 million and 500 million pounds respectively from last month’s estimates. If realized, 2020 production would be up 3.5 billion pounds or 1.6 percent from 2019.
The fat basis import forecast for 2019 was raised from last month on strong demand for imported butter, while the fat basis export forecast was reduced slightly. The skim-solid basis import forecast for 2019 was raised on higher imports of milk protein concentrates and other dairy products. The 2019 skim-solids basis export forecast was reduced primarily on weaker-than-expected sales of nonfat dry milk.
The fat basis import forecast for 2020 was also raised on continued strong import demand for butter, while the fat basis export forecast was reduced on slowing sales of butterfat. The skim-solids basis import forecast for 2020 was raised, but the export forecast was lowered on expected continued weak demand for NDM and increased global competition.
Cheese, butter, and whey price forecasts for 2019 were raised. The NDM price forecast was reduced on current price weakness and slowing demand. The 2020 price forecasts for cheese, butter, and NDM were lowered from the previous month, but the whey price forecast was unchanged.
The 2019 Class III milk price forecast was raised on higher forecast cheese and whey prices. Look for a 2019 average of $16.30 per hundredweight, up 25 cents from last month’s estimate and compares to $14.61 in 2018 and $16.17 in 2017. The 2020 average is put at $16.55, down a dime from last month’s estimate.
The 2019 Class IV price forecast was reduced as the lower forecast NDM price more than offsets the higher butter price. It is now projected to average $16.30 per hundredweight, down 15 cents from last month’s estimate, and compares to $14.23 in 2018 and $15.16 in 2017. The 2020 average was pegged at $16.45, down 30 cents from what was expected a month ago.
Indonesia announced earlier this month that it would increase tariffs on European dairy products and ask its dairy buyers to find alternative sources as a way to counter EU duties on palm biodiesel from Indonesia.
The Aug. 9 Dairy and Food Market Analyst reports that U.S. dairy exporters could benefit from the trade spat. “If Indonesia implements the retaliatory tariffs, it will have a price supportive impact on US whey and skim milk powder markets,” the DFMA stated. “In 2018, Indonesia bought 194 million pounds of whey products and 111 million pounds of skim milk powder from Europe.”
In dairy politics, I talked with Bob Gray, editor of the Northeast Dairy Farmers Cooperative’s newsletter, in the August 19 Dairy radio Now broadcast about the importance of dairy farmers commenting on the H-2A Modernization Proposed Rule to the U.S. Department of Labor. The proposal would expand the H-2A program from a “seasonal” one to one that allows immigrant employees to work for a full year on dairy operations.
Gray says the existing seasonal program works for fruit and vegetable growers for peak planting and harvesting times but there is no program that allows dairy farmers to hire workers for full time year around employment.
He urged dairy producers to make their case to the Department of Labor, citing the workload on a dairy. The important point to make, according to Gray, is how hard it is to find local help. Many communities have a low unemployment rate, plus the population in rural areas is aging so there’s not a lot of young people to hire.
He added that these are not low skilled jobs so they need to be trained. “It’s expensive equipment, you have to milk the cows, its herd management, so these jobs take very important skills to perform them.”
Comments can be sent to http://www.regulations.gov and should include Docket No. ETA-2019-0007 RIN 1205-AB89 Temporary Agricultural Employment of H-2A Nonimmigrants in the U.S.