The Dairy Situation and Outlook

 November and December is expected to stay in the $16’s and average about $16.25 for the year compared to $14.87 last year. Looking into 2018, Class III prices could stay in the high $15’s for the first half of the year and could reach the $16’s during the second half. But, milk prices can change a lot from rather small changes in milk production, domestic sales or dairy exports. So, the final 2018 milk prices could end up quite different. 

Higher cheese prices more than offsetting lower dry whey prices will result in an October Class III price near $16.60, up about $0.30 from $16.36 in September. The price of nonfat dry milk has dropped below $0.80 per pound to $0.74, the lowest price since April 2016, more than offsetting the higher butter price.

Relatively high stocks of cheese have dampened the increase in milk prices this fall. On Aug. 31 stocks of American cheese were 7.8 percent higher than a year ago with total cheese stocks 7.4 percent higher. Dry whey prices have fallen from heavy stocks with Aug. 31 stocks 68.6 percent higher than a year ago. Likewise, nonfat dry milk prices have fallen with Aug. 31 stocks 31 percent higher than a year ago. The amount of butter stocks as of Aug. 31 have declined from July to 12.1 percent lower than a year ago.

Dairy exports have supported cheese and butter prices. Cheese exports for August were 35 percent higher than a year ago and up 24 percent year-to-date. August butterfat exports were 177 percent higher than a year ago and 12 percent higher year-to-date. But, August nonfat dry milk/skim milk powder exports were 9 percent lower than a year ago. August dry whey exports were also lower than a year ago with a decline of 10 percent. The world demand for dairy products is expected to increase as China and other major importers expand their imports of dairy products. 

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