May 13, 2004

US Milk Production Projected Up

Milk production in 2004/05 is projected to rise above 2003/04 as growth in milk-per-cow is expected to be stronger than during the last 2 years.  Although milk-feed ratios are expected to be weaker in 2004/05, an expected resumption of prior allocations of rBST will help boost milk per cow.  Commercial use is only expected to increase slightly.  Milk prices are projected to fall from the strong prices of 2003/04.  CCC net removals of nonfat dry milk are forecast higher but cheese and butter are expected to be more closely balanced.

The dairy production forecast for 2003/04 is reduced from last month due to slower growth in milk-per-cow.  Tighter milk supplies and continued strong fat-basis demand result in even higher milk prices than forecast previously.  Class III prices are forecast at $15.60 to $15.80 per cwt and the Class IV price at $12.30 to $12.60 per cwt.  The all milk price is forecast is at $16.20 to $16.40 per cwt.