USDA report sees 2017 milk prices at $16.85 to $17.65 per cwt
USDA lowers its milk production forecast for 2017 as slower growth in cow numbers more than offsets slightly higher growth in milk per cow.
USDA released its monthly update of the World Agricultural Supply and Demand Estimates Report. The next monthly report will be released Jan. 12, 2017. Below is commentary about the dairy and sugar markets. (Read the full report and download tables here: http://www.usda.gov/oce/commodity/wasde/latest.pdf.)
The milk production forecast is lowered for both 2016 and 2017 as slower growth in cow numbers more than offsets slightly higher growth in milk per cow. Fat basis exports are raised for 2016 on higher butter exports, and skim-solids basis exports are increased on stronger sales of lactose.
For 2017, fat basis exports are reduced on expected increased competition in cheese markets, but strength in lactose and nonfat dry milk (NDM) exports are expected to support higher skim-solids basis exports. Import forecasts are lowered from last month for both fat and skim-solids bases. Fat basis ending stock forecasts for 2016 and 2017 are raised on higher expected cheese stocks.
Robust nonfat dry milk exports are expected
Although the skim-solids basis ending stock forecast for 2016 is raised on higher-than-expected cheese and NDM stocks, the forecast for 2017 is unchanged as robust NDM exports are expected to draw down stocks during the year. Price forecasts for cheese and butter are raised for 2016 on current price strength, but the forecasts for NDM and whey prices are unchanged. Product prices are forecast higher for 2017 as domestic demand strength is expected to carry into next year and higher export demand will support NDM and whey prices.
2017 milk prices as high as $17.65 per hundred weight
As a result of the higher cheese and butter price forecasts, Class III and Class IV price forecasts are raised for 2016. Class III and IV prices are forecast higher for 2017 on higher component product prices. All milk prices are forecast higher at $16.05 to $16.15 per cwt for 2016 and $16.85 to $17.65 per cwt for 2017.
More cane sugar from Hawaii, Texas
Minor adjustments are made to the 2015/16 U.S. sugar supply and use balance based on revised Sweetener Market Data (SMD) submitted by processors to USDA. For 2016/17, Hawaii cane sugar production is raised by 6,000 short tons, raw value (STRV) based on close to end of season processor reporting. Texas cane sugar production is raised by 5,000 STRV based on increased crop yield reported by NASS.
The projection of 2016/17 beet sugar production is unchanged as lower-than-expected sucrose levels in certain parts of the Red River Valley and Michigan are countered by strong content and record crop yields in western growing areas. Imports of re-export sugar are raised by 50,000 STRV to 175,000 based on pace to date while imports from Mexico are reduced by 45,330 STRV to 972,246. Total use is unchanged. Ending stocks for 2016/17 are projected at 1.912 million STRV, implying an ending stocks-to-use ratio of 15.7 percent. Mexico sugar production for 2016/17 is increased by 70,922 metric tons (MT) to 6.371 million.
Deliveries for human consumption are reduced by 65,219 MT to 4.389 million. These changes are made on the basis of forecasts made on November 14, 2016 by Comite Nacional Para El Desarrollo Sustentable de la Caña de Azucar (CONADESUCA). The ending stock total for 2016/17 is projected at 1.229 million MT, an amount projected to meet sugar supply requirements of domestic consumption and IMMEX deliveries for 2½ months of the following marketing year and exports to the U.S. market for the first three months of that same year.
Exports are projected residually at 1.470 million MT. Exports to the United States are reduced by 38,795 MT based on the larger of the Target Quantity of U.S. Sugar Needs from this month’s WASDE or the effective 2016/17 Export Limit previously calculated by the U.S. Department of Commerce, as per the Countervailing Duty (CVD) Suspension Agreement of December 19, 2014. Exports for 2016/17 to non-U.S. destinations are projected at 637,500 MT.