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Milk Price to Increase as Herd Contracts

22 October 2012

USDA Foreign Agricultural Service

US - Although the rate of the dairy herd contraction has slowed down considerably, the latest USDA'S Livestock, Poultry and Dairy Outlook, suggests that milk prices will increase.

The September Milk Production report indicated that producers were culling at a slower pace than earlier projected. An improving feed outlook along with higher milk prices may have reduced the urgency to reduce herd size.

The October forecast places the dairy cow herd at 9,225 thousand head in the current year and 9,125 thousand head in 2013.

The residual effects of last summer’s heat and pressure from high feed prices suggest a small reduction from September’s forecast of annual output per cow to 21,635 pounds this year, with a slight increase expected next year to 21,880 pounds. An improved feed price outlook and an uptick in milk prices are the basis for the forecast. Milk production in 2012 is forecast at 199.6 billion pounds, a reduction from September’s forecast.

Forecast production in 2013 was raised in October to 199.7 billion pounds based on the higher forecast yield per cow and a slower decline in cow numbers compared with earlier 2013 forecasts.

Further Reading

You can view the full report by clicking here.

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