Dairy Price Forecasts, Herds By County Noted

As Wisconsin’s dairy industry celebrates June Dairy Month, it’s appropriate to take stock in where the industry is at in terms of USDA’s 2011 production forecast, what counties are dairy powerhouses in terms of herd numbers and more.

USDA released its June World Agricultural Supply and Demand Estimates last week, raising its U.S. milk production forecast for 2011. USDA economists expect producers to continue to expand their herds through the middle of the year, and although herds may begin to decline toward the end of this year, cow numbers are anticipated to be above 2010.

“However, higher feed costs will impact profitability and the dairy cow inventory is expected to decline in 2012. Tighter feed supplies will also likely impact the rate of increase of milk per cow. As a result, the milk production forecast for 2012 is reduced from last month,” the government economists report.

Commercial dairy exports are forecast higher for 2011 largely due to stronger expected cheese exports. However, imports of cheese and milk proteins have also been stronger than expected, and the import forecast for both 2011 and 2012 is raised.

USDA increased its dairy product price forecasts from last month. Butter supplies are tight and demand for cheese, nonfat dry milk (NDM) and whey are expected to support product prices. Class III and Class IV price forecasts are raised from last month in line with the increased product prices. The all milk price is now forecast at $19.65 to $20.05 per hundredweight for 2011. Price forecasts for 2012 are also raised as the smaller production increase is expected to support higher product and Class prices. The U.S. all milk price for next year is forecast at $17.75 to $18.75 per hundredweight.

USDA provides a snapshot comparison of the U.S. all milk price (which doesn’t reflect any deductions from producers as authorized by legislation). The all milk price is the simple average of monthly prices received by producers for milk at average test. In 2009, it was $12.83, rebounding to $16.29 last year. USDA projects it at $18.95 to $19.45 for May 2011, and $19.65 to $20.05 for June. Next year in May, USDA economists anticipate $17.35 to $18.35, and $17.75 to $18.75 in June 2012.
 
As for Class III, it was $10.89 in 2009, $14.41 last year. USDA is projecting Class III at $16.45 to $16.95 for May and 417.40 to $17.80 for June. Next year in May and June, USDA predicts Class III to be at $15.35 to $16.35 and $16 to $17, respectively. (Annual Class III prices are the simple averages of monthly minimum Federal Order milk prices paid by regulated plants for milk used in that respective class.