More Milk, Lower Dairy Prices Ahead, USDA Says

March 9, 2012 09:45 AM

World Agricultural Supply and Demand Estimates report lowers All-Milk Price for 2012 to $17.60-$18.20 per cwt.


USDA raised its forecast for 2012 U.S. milk production and milk cow numbers in its World Agricultural Supply and Demand Estimates report, released today.

USDA pushed milk production up 700 million pounds from February, to 199.7 billion pounds.
“That’s getting close to 200 billion pounds, which could be an all-time high,” AgDairy LLC’s Robin Schmahl said.
Herds are increasing more rapidly than expected, USDA said. Although herds are expected to decline from 2011 in the second half of the year, the rate will be less than previously expected. Mild weather in the early part of the year is also supporting higher levels of milk production.
Import and export forecasts are unchanged. Schmahl said he wasn’t surprised to see exports remain at February’s estimates of 8.6 billion pounds for fats-basis use, and 32.3 billion pounds for skim-solids. The U.S. must compete for business with the world’s other milk-producing nations.
“The U.S. saw a big push-up in exports last year, but that was compared to the depressed years of 2009 and 2010,” Schmahl said. “But, remember, we’re in a global market. We’re seeing growth in milk production in other countries. They’re also responding to higher prices and better weather.”
With the higher forecast for 2012 milk production, USDA lowered estimates for prices for cheese, butter, nonfat dry milk and whey. As a result, both Class III and Class IV price forecasts are reduced from last month. The All-Milk price for 2012 is lowered to $17.60-$18.20 per cwt.

Read today’s full USDA report at

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