The United States Department of Agriculture expects U.S. milk production to reach 200 billion lb. for 2012, up from 196.2 billion pounds in 2011 but lower than earlier projections for the year. Milk production in 2013 is projected to be 198.9 billion lb.

All of it is due to the drought, which is forcing feed prices up substantially across the country. Those increases are expected to continue well into next year.

USDA also expects cow numbers to decline as well to 9.11 million cows in 2013, off about 100,000 head.

Because of lower milk production, USDA is projecting the all-milk to range from $17.80 to $18.80 in 2013, up about 65¢/cwt over 2012. But those higher prices will likely attract more butterfat imports and a 900 million pound decrease in skim-solids exports.

The complete report can be read here.

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