Dairy exports have supported cheese and butter prices. Cheese exports for August were 35% higher than a year ago and up 24% year-to-date. August butterfat exports were 177% higher than a year ago and 12% higher year-to-date. But, August nonfat dry milk/skim milk powder exports were 9% lower than a year ago, the second straight month of decline. August Dry whey exports were also lower than a year with a decline of 10%. Both nonfat dry milk/skim milk powder and dry whey are experiencing strong market competition for exports from the EU. Competition for markets will remain strong in 2018 as milk production is expected to increase in the two largest exporters, EU and New Zealand with also some milk production recovery in Argentina and Australia. Any major changes in trade agreements, in particular NAFTA could also impact exports. But, world demand is expected to increase as China and other major importers expand their imports of dairy products. This will help to absorb some of the increase in world milk production.
Milk prices for the remainder of this year and into 2018 will depend upon the level of milk production. USDA’s report for September milk production showed the increase in milk slowed to 1.1% compared to increases of 2% for the previous two months. Milk cow numbers decline 4,000 head from August but were still 69,000 head or 0.7% higher than a year ago. The slowdown in milk production was due to milk per cow which was up just 0.3% from a year ago.