The All-Milk price is projected to drop to $20.00 to $20.10 per cwt. for 2011, and $17.75 to $18.65 per cwt. for 2012.
Source: USDA’s World Agricultural Supply and Demand Estimates
USDA raised its U.S. milk production forecast for 2011 today, saying the dairy herd has been expanding at a more rapid rate and milk per cow during the summer increased more rapidly than expected.
In its Oct. 12 World Agricultural Supply and Demand Estimates (WASDE), USDA also lowered its forecast for 2012 milk output, based on projected lower milk prices and weakening milk-feed ratios that are likely to increase the pace of later-year declines in cow numbers.
USDA projected the All-Milk price to drop to $20.00 to $20.10 per cwt. for 2011, and $17.75 to $18.65 per cwt. for 2012.
The WASDE report also lowered fat basis exports based on slightly weaker butter and cheese exports, but left them unchanged for 2012. Skim solids exports are unchanged for 2011 but are lowered for 2012. Import forecasts are unchanged.
Butter and cheese prices for 2011 are forecast lower, but the nonfat dry milk (NDM) price forecast is unchanged, and whey prices are forecast higher. International prices have been weaker, which has put some pressure on butter and cheese prices. USDA also reduced its butter and cheese price forecasts for 2012.
“NDM (nonfat dry milk) prices have also been under pressure from weakening international prices and although the forecast for 2011 is unchanged from last month, the price forecast for 2012 is reduced,” USDA reported.
Whey prices are raised for both 2011 and 2012 as demand is strong. The Class III price is lowered for 2011, but for 2012 the higher whey price more than offsets a decline in the cheese price, and the Class III price forecast is raised. The Class IV price is lowered for both years due to lower forecast butter and NDM prices.