The US Agriculture Department on Wednesday increased milk production forecasts for 2009 and 2010 as cow herd reductions occur at a slower-than-expected pace and output per animal is higher. The USDA boosted milk production this year to 188.2 billion lbs, an increase of 600 million lbs from last month. Output during 2010 was raised 100 million lbs to 186.5 billion lbs.
In its monthly crop report, the USDA also increased its 2009 all-milk price forecast to $12.20 per hundredweight from $12 projected in July. The department slightly lowered its 2010 price forecast by 20 cents to $15.15 per cwt. Prices next year are expected to be higher due to an improving economy and smaller milk output.
Last month, the government announced a three-month increase in US dairy support prices that would put an additional $243 million into farmers' pockets and offset the lowest milk prices in 30 years. Burdened by economic recession and an abrupt slump in exports, dairy prices collapsed last fall. They are two-thirds of last year's level and below operating costs for many farmers.
Under the temporary increase, USDA will pay 92 cents per lb for non-fat dry milk, $1.31 per lb for block cheddar cheese and $1.28 per lb for cheddar cheese in barrels. Ordinarily, the support price is 80 cents for dry milk, $1.13 for block cheddar cheese and $1.10 for cheddar in barrels.
USDA estimated it would buy an additional 150 million lbs of non-fat dry milk and an additional 75 million lbs of cheese. "Cheese and non-fat dry milk price forecasts are raised for 2009 as higher support prices and increased net removals support domestic prices," USDA said in its crop report.
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