Forecast milk production for 2010 and 2011 is little changed from last month, in last week's USDA World Agricultural Supply and Demand Estimate. In November, the agency forecast 2011 milk production at 195.6 billion pounds. This month's estimate was 195.5 billion. The milk production estimate for 2010 remained unchanged at 192.8 billion pounds. That means USDA forecasts a 1.4 percent jump in milk production next year.
Fat-basis imports for 2010 are lowered primarily due to lower imports of cheese but skim-solids imports are unchanged due to higher imports of expected imports of other products. Fat basis exports for 2010 are raised as sales of cheese and fluid milk and cream are strong and skim-solids exports are boosted by strong sales of cheese and nonfat dry milk (NDM). Exports for 2011 are forecast higher due to expected growth in butter and nonfat dry milk sales. Ending stocks for 2010 are raised to reflect higher-than expected stocks of cheese.
For 2010, cheese and whey prices are unchanged from last month at about $1.51 per pound for cheese and 37 cents a pound for whey. Cheese prices are forecast to be in the high $1.50 range next year and about 38 cents for whey. NDM prices are forecast higher but the butter price forecast is reduced reflecting recent sharp declines in butter prices.
With no change in either the cheese or whey price, the Class III price forecast for 2010 is unchanged. However, the Class IV price forecast is reduced, due to a lower butter price forecast which more than offsets a higher than expected NDM price.
For 2011, the range of the cheese price forecast narrowed but whey is forecast higher. The butter price is reduced as current price weakness spills into early 2011. NDM prices are forecast higher. The ranges of the Class III and Class IV price forecasts are narrowed from last month.
The All-Milk Price is forecast to average $16.25 to $16.35 per hundredweight for 2010 and $15.90 to $16.70 per hundreweight for 2011. The Class III price forecast for 2010 is around $14.40 and for 2011 it is between $14.45 and $15.25.