USDA is projecting all-milk prices will climb to $16.05 to $16.95/cwt in 2010, some $3.45 to $4.25 better than 2009. The agency made its projections in its Livestock, Dairy and Poultry Outlook report
released this morning.
The expected surge in prices will come as a result of both declining cow numbers and improving consumer demand.
USDA expects dairy cow numbers to decline a further 2% next year on top of the 3% that were sent to market in 2009. As a result, U.S. milk production will fall 0.8% to 187.7 billion lb., the first decline in American milk output since 2001.
Due to cheaper feed, however, milk per cow could reach nearly 21,000 lb. next year, up from 20,570 lb./cow this year.
Corn prices are projected to fall to $3.25 to $3.85/bu in 2009/10, down from more than $4 this year. Soybean meal prices are also expected to decline 6% to as much as 25% next year, falling to $250 to $310/ton. "The decline in feed prices combined with higher milk prices will improve the milk-feed profitability ratio, but not to a level that signal expansion,” say USDA economists Kathryn Quanbeck and Rachel Patton.