The Agriculture Department left unchanged its milk production forecasts for 2019 and 2020 in the latest World Agricultural Supply and Demand Estimates.
    2019 milk production remains estimated at 218.6 billion pounds while 2019 marketings was raised 100 million pounds from last month’s report. If realized, 2019 production would be up 1 billion pounds or 0.5% from 2018.
    2020 production and marketings remain estimated at 222.4 and 221.4 billion pounds respectively. If realized, 2020 production would be up 3.8 billion pounds or 1.7% from 2019.
    Cheese and butter price forecasts for 2019 were lowered, the nonfat dry milk (NDM) price was raised, and the whey price was unchanged. The 2020 butter price forecast was reduced on continued demand softness, but cheese prices were forecast slightly higher on stronger demand. NDM and whey prices were raised, supported by higher expected export demand.
    The 2019 Class III milk price forecast was lowered due to an expected weaker cheese price. The 2019 average was projected at $16.95 per hundredweight (cwt.), down a nickel from last month’s estimate and compares to 2018’s average at $14.61 and $16.17 in 2017. The 2020 average was raised 15 cents to $17.65.
    The Class IV price was unchanged from last month as the lower butter price was offset by a higher NDM price. Look for the Class IV to average $16.30 in 2019, up from the 2018 average of $14.23 and $15.16 in 2017. The 2020 Class IV average was raised a dollar to $16.95. The increased 2020 Class III and IV prices are due to gains in most product prices with the exception of butter.
    This month’s 2019/20 US corn supply and use outlook was unchanged from last month. The projected season-average farm price was unchanged at $3.85 per bushel. Global coarse grain production for 2019/20 was forecast 6.8 million tons higher to 1.4 billion. The 2019/20 foreign coarse grain outlook is for larger production, increased consumption, and higher stocks relative to last month. Foreign corn production was forecast higher with increases for China and Bolivia more than offsetting a reduction for Canada, according to the USDA.
    U.S. oilseed production was forecast at 107.6 million tons, down slightly due to a decrease for cottonseed. Soybean supply and use projections were unchanged from last month. The U.S. season-average soybean price for 2019/20 was forecast at $8.85 per bushel, down 15 cents.
    The soybean meal price forecast was reduced $15.00 to $310.00 per short ton. The soybean oil price forecast was unchanged at 31.0 cents per pound. Global oilseed production was forecast up 3.3 million tons to 574.6 million, with greater soybean, sunflower seed, and peanut production partly offset with lower rapeseed and cottonseed forecasts. China’s soybean production projection was raised 1.0 million tons to 18.1 million reflecting higher area and yield.
    The month’s U.S. cotton outlook included lower production and ending stocks compared with last month. Production was lowered 611,000 bales mainly due to a 500,000-bale decline in Texas. Domestic mill use and exports are unchanged.
    The Daily Dairy Report stated that USDA did not survey farmers this month so it did not adjust its crop production outlook and reported that more than 1 billion bushels of corn are still in the field, “exposed to the elements and vulnerable to quality issues, including harmful fungi.”
    Things sounded promising on Capitol Hill this week as U.S. Dairy Export Council President and CEO Tom Vilsack praised an announcement that the White House and Congress reached a deal on the US-Mexico-Canada Agreement (USMCA).
    “Washington worked hard to make USMCA an even better deal for America’s dairy farmers and exporters,” Vilsack said in a joint press release with the National Milk Producers Federation (NMPF). “Now we are counting on Congress to move expeditiously to pass USMCA.” A House vote could come the week of December 16 with a Senate vote hopefully before year end.
     “USMCA makes important changes to Canada’s trade-distorting policies, reforms Canada’s controversial dairy pricing system and provides exclusive access to the Canadian market for U.S. farmers and manufacturers. It also strengthens the U.S. dairy industry’s relationship with Mexico and establishes new protections for common cheese names, using a combination of approaches to protect the continued use of a number of generic cheese terms such as parmesan and feta.”
    “Important advancements made during negotiations between lawmakers and the White House included an enhanced Dispute Settlement process for enforcing the agreement’s measures,” the press release stated.
    Tweets from President Trump this week indicated that the on again, off again Phase One agreement between the US and China was back on and would result in China purchasing $50 billion in US agricultural products, including soybeans and pork shipments.
    President Trump was also expected to sign an implementing proclamation this week of the US-Japan trade deal, meanwhile the aftermath remains to be seen of UK Prime Minister Boris Johnson’s huge electoral victory this week and his promise to take his country out of the European Union.
    National Milk commended the House of Representative for passage of the Farm Workforce Modernization Act. “The bill, the first House-passed agricultural labor reform since a comprehensive immigration plan in 1986, includes critical provisions to address dairy’s unique workforce needs,” says NMPF CEO Jim Mulhern, and “helps address dairy’s unique workforce challenges. Agricultural labor reform is long overdue. With today’s action it is now imperative the Senate act to fully address the needs of dairy farmers and all of agriculture, helping dairy farmers do what they do best: feed our nation and the world.”
    NMPF also praised the confirmation of Dr. Stephen Hahn as FDA commissioner, calling on him to “provide strong leadership to address the issue of mislabeled plant-based products inappropriately marketed using dairy terms.”
    Last, the Northeast Dairy Farmers Cooperatives newsletter reports that Congressional leadership has agreed “in principle” to all 12 federal appropriations bills including agriculture for FY2020 and “would mean no more Continuing Resolutions.”
    The crash you heard this week were cheese prices at the Chicago Mercantile Exchange, particularly the barrels, which closed Friday the 13th at $1.6950 per pound, down a whopping 53.25 cents on the week, lowest since September 30, but still 38.5 cents above a year ago. The hemorrhaging leaked onto the blocks which finished at $1.7975, down 17.25 cents and 39 cents above a year ago. The spread is at 10.25 cents below the blocks. 20 cars of barrel sold on the week and 4 of block.
    Dairy Market News reports that central cheese sales are steadying and warned that demand, in some cases, is falling behind stronger production and growing supplies. Milk is readily available and a number of cheesemakers are foregoing the spot milk market because they are at capacity. Producers are hopeful the football playoff season will keep buyers busy. Milk production is higher in the region and cheese market tones are on “shaky ground,” says DMN, but barrel producers report the price declines may be some enticement for buyers, whom have been reticent with the $2 pus price.
    Western cheese intakes are stable for retailers and food service. Export demands are at seasonal levels. Buyers have been getting only what they need the past few weeks however, DMN says, if the declines in prices are sustained, cheese sales are likely to become more active. Production continues to increase ahead of the holidays as milk supplies are plentiful in the west.
    Butter saw its first positive move since November 18 this week, closing at $1.96 per pound, up 4.5 cents on the week but 23 cents below a year ago, on 7 sales.
    Butter producers report plentiful cream. Butter orders have already been placed to fulfill holiday needs but current demand is meeting expectations. Contacts expect to see retail promotions increase ahead of the winter holidays. Some contacts expect butter prices to level off and find some steadiness while the more bearish expect prices in the $1.80 area.
    Western butter makers say, with ample amounts of affordable cream, they are running their churns hard. Retail orders are strong as buyers try to get shelves restocked ahead of the holidays and bulk buyers continue to make inquiries for early 2020 needs. Butter makers have seen inventory values fall with the declining prices and while stocks are adequate, they question the right amount to have on hand, says DMN.
    CME nonfat dry milk saw some ups and downs but closed Friday at $1.2650 per pound, up a quarter-cent and 32.5 cents above a year ago. 3 cars traded hands.
    Spot dry whey saw a Friday price at 33.75 cents per pound, down 3 cents and 11.25 cents below a year ago, with 19 cars finding new homes on the week.
    The USDA’s latest dairy product commercial disappearance data helps explain recent prices, according to Matt Gould, analyst and editor of the Dairy and Food Market Analyst newsletter. Speaking in the December 16 Dairy Radio Now broadcast, Gould reported that October butter prices topped the rest of the world but domestic consumption was up 4.1% in October, up 3.1% in August, and up 6.7% in September.
    American type cheese consumption hovered between 1.5 to 1.6% in a three month rolling average, he said, so domestic growth was solid however, “The problem is exports.” American type cheese exports were down nearly 10% in the three months ending in October, and Gould blamed the on-going trade war.
    Nonfat dry milk exports were struggling, he said, but that was made up for by domestic use, which was up 18.3% and exports were up almost 17% in October.
    HighGround Dairy (HGD) adds that total October cheese disappearance marked the strongest monthly disappearance in history “and demand continued up versus prior year for the second consecutive month.”
    Butter disappearance topped that of a year ago for the third consecutive month and moved toward seasonal highs, marking the strongest October on record, according to HGD, and the same was true for nonfat dry milk, with both export and domestic demand pushing total disappearance higher.
    Unfortunately the positive data didn’t hold true on fluid milk. October sales totaled 4.0 billion pounds, according to DMN, down 2.1% from October 2018.
    Conventional product sales totaled 3.8 billion pounds, down 2.2% from a year ago.
    Organic products, at 230 million pounds, were up 0.9% and represented 5.7% of total sales for the month.
    Whole milk sales totaled 1.3 billion pounds, up 0.4% from a year ago and made up 32% of total fluid sales in the month. Sales for the 10 month period totaled 12.5 billion pounds, up 0.9% from a year ago. Skim milk sales, at 276 million pounds, were down 11.8% and made up 6.8% of total milk sales for the month.
    Total packaged fluid milk sales, January through October totaled 38.2 billion pounds, down 1.8% from a year ago. Conventional products year-to-date totaled 36.1 billion pounds, down 1.7%. Organic products, at 2.1 billion pounds, were down 2.2% and represented about 5.5% of total fluid milk sales for the period.
    The figures represent consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92% of total fluid milk sales in the U.S.
    Cooperatives Working Together (CWT) member cooperatives accepted nine offers of export assistance this week to help capture sales of 196,211 pounds of Cheddar and Gouda cheese, 330,693 pounds of whole milk powder and 149,914 pounds of cream cheese. The product is going to customers in Asia, Central and South America through April 2020.
    National Milk announced that it has reached a settlement to end a class-action lawsuit concerning its herd retirement program that ended in 2010 and was administered through its Cooperatives Working Together initiative. A NMPF press release stated that “The settlement will safeguard ongoing efforts to aid U.S. dairy producers, lift a years-long legal cloud and allow NMPF members and the current CWT program to move forward with greater legal and fiscal certainty.”
    The plaintiffs, who are generally larger retailers and companies who directly purchased butter and cheese from CWT member cooperatives, have agreed to a settlement of $220 million in exchange for a release from all claims. Based on antitrust rules that mandate a tripling of any damages, that amount is less than 6% of the damages sought by the plaintiffs. Neither NMPF nor any of its member cooperatives admit any wrongdoing as a result of this settlement.
    “There is no way to sugarcoat a settlement of this size, especially given that the Herd Retirement Program was a well-publicized effort designed to serve dairy producers in difficult times and was praised by two Secretaries of Agriculture as well as leading members of Congress,” said NMPF CEO Jim Mulhern. “Given the potential damages and the uncertainties surrounding any jury trial, resolving this case eliminates the possibility of a truly crippling outcome. Lifting this cloud will aid us in our work advancing the well-being of U.S. dairy producers, which includes the current robust CWT export assistance program.”