Despite record milk production, USDA projects the All-Milk price for both 2014 and 2015 to average above $20 per cwt.
U.S. milk production will reach an all-time high this year and next, USDA said today in its World Agricultural Supply and Demand Estimates (WASDE) report.
Even so, dairy prices are forecast to remain fairly strong, with the All-Milk price for both 2014 and 2015 projected to average above $20 per cwt.
USDA estimates this year’s U.S. milk output will climb to 206 billion pounds, nearly 5 billion pounds higher than the nation’s dairies produced last year. In 2012, the U.S. produced 200.5 billion pounds of milk.
Today’s WASDE report anticipates U.S. dairies will produce 212.5 billion pounds of milk in 2015.
Lower feed costs are expected to support higher milk output per cow, USDA says.
USDA lowered forecasts for U.S. dairy exports for 2014 and 2015, saying "Russia’s ban on imports from a number of dairy exporting countries will likely increase competition in export markets."
The report also included higher estimates for butter and whey prices in 2014. USDA projects butter to average $2.06 per lb. this year, and cheese, $2.05 per lb. Both are well above last year’s levels.
The strength in butter prices is expected to carry into 2015, with USDA expecting an average price of $1.72 per lb., also above 2013 levels. For 2015, cheese -- at an average of $1.72 -- and nonfat dry milk – at $1.64 -- are unchanged from last month.
USDA raised its estimates for 2014 Class III and Class IV prices on stronger component product prices. For 2014, USDA projects an average Class III price of $21.35 per cwt. This year’s Class IV price is expected to average $22.50 per cwt., while the 2014 All-Milk price will average $23.65.
Prices are predicted to soften next year, with Class II average $17.50, Class IV $19.25, and the All-Milk price $20.25.
Elsewhere in today’s WASDE report, USDA forecasts record corn and soybean crops ahead. Corn production for 2014/2015 is projected to reach a record 14.032 billion bushels, with average yield of 167.4 bu. per acre.
U.S. soybean farmers will harvest a record 3.816 billion bushels this year, compared with 3.8 billion (103.4 million metric tons) estimated in July.