Monthly Forecast Update – Dec. 2020

Monthly Forecast Update:

• Reduced Dec-20 Class III milk forecast based on declines last month.
• Reduced Q1 and Q2 Class III milk forecast expectations of fewer government orders, more milk headed to cheese, and anticipating slowing foodservice demand Q4 20 to Q1 21.
• Increased Q1 and Q2 Class IV milk forecast – La Niña forecast has increased intensity and duration. Given more robust demand from Asia and the potential for weather disruptions that could cause prices to lift in Q1. That said, Europe and the United States have more milk and the ability to backfill shortfalls from New Zealand – that could limit upside.
• The adjustments to the Class III and IV forecast adjusted the Class I and II prices also. Expectations are for Class I prices to increase throughout 2021 as commodity prices gain strength.
• Continue to forecast New Zealand dairy products carrying a substantial premium to EU and US prices through 2021.
• The exchange rate increased by 1.21 – that has impacted Ceres EU forecasts, somewhat reducing EU prices and providing some increases for US prices.
• Increased whey price forecast through Q2 2021 due to stronger demand from China.