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Dairy producers can anticipate much-improved year in 2010

Both milk production and dairy cow numbers have declined in the U.S. In the meantime, dairy product prices have risen, and so have prices farmers receive for milk. As a result, dairy producers can anticipate a much improved year in 2010 with higher milk prices. These are among the key points presented by Bob Cropp, Professor Emeritus of Agricultural and Applied Economics in his December 2009 Dairy Situation and Outlook Report.

USDA’s latest milk production report estimates U.S. milk production for the month of November 1.0% lower than a year ago, Cropp notes. This is the fourth consecutive month that production was below a year ago. November milk cow numbers were down 2.6% from a year ago and milk per cow was 1.7% higher.

The majority of the decline in cow numbers and milk production continues in the West.  Cow numbers and production were also down in the Northeast with the exception of Pennsylvania. In contrast, the Midwest continues to have more cows than a year ago with relatively good milk production per cow. Compared to a year ago November milk production was up 4.5% in Wisconsin, 3.8% in Indiana, 2.6% in Iowa, and 1.1% in Minnesota.

Dairy product prices have improved, and so have prices paid to farmers. The December Class III price will be near $14.85, up almost $4.90 from the yearly low of $9.97 for both June and July. The U.S. All Milk Price will be near $16.00 for December, about $4.70 higher than the yearly low of $11.30 for both June and July.

We may not see an increase in January milk prices, Cropp says. But, beyond January with a continued decline in milk production from a year ago and some signs of perhaps improvement in domestic sales, especially cheese, and anticipated further improvement in dairy exports, milk prices will continue to improve in 2010. Dairy producers can anticipate a much improved year in 2010 with higher milk prices.

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