"The overall [dairy] demand outlook is one of recovery,” say USDA economists in their Livestock, Dairy and Poultry Outlook released this morning.
USDA expects a continued contraction in the size of the dairy herd, despite an uptick of 3,000 cows reported in yesterday's February Milk Production report over January. "The contraction is expected to be larger in the first half [of 2010,] with year-over-year reduction reaching 1.7% following a 1.2% contraction in 2009. The milk-feed price ratio is expected to recover smartly in 2010 compared with the 1.72 ratio calculated for 2009,”
Commercial use of dairy products is also expected to improve 1.43% in 2010 as the U.S. economy makes its slow recovery. Dairy exports are also expected to recover in the second, third and fourth quarters of 2010. Bottom line: The all-milk price is forecast to average $15.55 to $16.15/cwt for 2010, up from $12.81 in 2009.