Looking globally, the U.S. Dairy Export Council reported U.S. dairy export value was nearly $3.92 billion in the first eight months of 2019, up 3 percent from last year and the highest figure in five years. Gains were led by increased volumes of cheese, as well as higher selling prices for dairy ingredients.

Credit domestic demand and short milk supplies, however, for the strong U.S. prices. Cheese exports were at a nine-month low in August, according to the Dairy and Food Market Analyst (DFMA), which cited shipments to Mexico being at an 11-month low and to Japan, at a 35-month low.

The DFMA stated, “Japanese buyers tend to purchase six months in advance or more. This is the beginning of a trend.” Hopefully, the new U.S. Japan trade agreement will change that. The DFMA also pointed out in total, the U.S. exported 14 percent of its milk solids in August, only slightly above the 13.7 percent shipped in June and July.

HighGround Dairy (HGD) said cheese exports were down 4 percent from July and 5.9 percent below August 2018. Butter was up 38.5 percent from July but 33.8 percent below a year ago. Nonfat dry milk and skim milk powder exports were up 3 percent from July but 18.3 percent below a year ago, and dry whey exports were up 21.6 percent from July but 33.4 percent below a year ago.

To nobody’s surprise, considering the high U.S. prices, U.S. butter imports were up, jumping 21.8 percent from July and 19.8 percent above a year ago. Cheese imports were the highest in nine months and the largest August volume since 2015, said HGD.

August imports from the European Union, at 28.9 million pounds, were the strongest on record, up 17 percent from 2018. HGD said: “The industry has been anticipating the EU cheese tariffs and started to stockpile imports before they were expected to be implemented in October, which means September imports will be strong as well.”

USDA outlook

The Agriculture Department again raised its 2019 milk production estimate in its latest World Agricultural Supply and Demand Estimates (WASDE) report, based on higher cow numbers and stronger growth in milk per cow. The 2020 forecast was upped from last month, based on expected continued gains in milk per cow.

This year’s production and marketing were estimated at 218.2 billion and 217.1 billion pounds, respectively, up 200 million from last month’s estimate on production and 100 million higher on marketing. If realized, 2019 production would be up 600 million pounds, or 0.3 percent, from 2018.

2020 production and marketing were estimated at 221.6 billion and 220.5 billion pounds, respectively, up 400 million and 300 million from last month’s estimates. If realized, 2020 production would be up 3.4 billion pounds, or 1.6 percent, from this year.

Cheese and NDM prices for 2019 were raised, but price forecasts for butter and whey were reduced. The Class III milk price projection was raised from last month, as the higher cheese price more than offsets the lower whey price. Look for the 2019 average at about $16.55 per cwt., up a dime from last month’s estimate and compared to $14.61 in 2018 and $16.17 in 2017. The 2020 average is now pegged at $17.20, up 15 cents from last month’s projection.

The Class IV price was raised as the higher NDM price more than offsets the lower butter price. It is estimated to average $16.20, up a nickel from a month ago and compared to $14.23 in 2018 and $15.16 in 2017. The Class IV is projected to average $16.10 in 2020, down a nickel from last month’s estimate.

Cheese and NDM prices for 2020 were raised from the previous month, but the price forecast for butter was reduced. Whey was unchanged. As a result, the Class III price forecast is higher but the Class IV price was lowered, as the higher NDM price is more than offset by the lower expected butter price.

AFBF calls for review

This January at its 100th annual meeting, the American Farm Bureau Federation (AFBF) recommended to the Board of Directors that the organization convene a Farm Bureau- and producer-led coalition to review methods to restructure and modernize the current Federal Milk Market Order System.

Bob Gray reported details in his Oct. 4 Northeast Dairy Farmers Cooperative newsletter, stating the AFBF is proposing that milk price discovery methods be expanded and modernized, as well as the elimination of bloc voting provisions, an update in the method of calculating make allowances, and specific changes to Federal Order provisions in southeastern states.

In its 16-page summary, AFBF noted it has been 20 years since Federal Orders have undergone major revisions. In that time, dairy farm numbers have dropped nearly in half and fluid milk utilization has dropped by nearly 30 percent, but consumption of other dairy products has risen nearly 10 percent.

By 2030, U.S. milk production is expected to climb to 250 billion pounds annually. Complete details are posted at www.fb.org/files/afbf_FMMO_report_2019.pdf

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions of comments for Lee Mielke may write to him in care of this publication.