September 19, 2006

USDA increases milk production forecast

The Agriculture Department raised its 2006 milk production forecast in its latest World Agricultural Supply and Demand Estimate report.

The forecast was previously lowered due to an expected reduction in milk output as a heatwave was expected to hit milk-producing regions hard. However, the impact was smaller than expected.

2006 output is now projected to hit 182 billion pounds or about 2.8 percent higher than 2005's figures.

Strong demand for cheese is helping support prices. However, larger supplies of butter are weakening prices instead.

Dairy producers should not expect lower feed prices due to the larger crops expected, according to Dairy Profit Weekly editor, Dave Natzke. This is because  crop use would also be similarly increased, resulting in little change in prices.