U.S. Dairy Sector Price Pressure Builds

WASHINGTON - Dec 9/05 - SNS -- Forecast U.S. domestic milk production for 2005 and 2006 is slightly lower than last month, but remains well above the previous two years, according to the latest report from the USDA's World Agricultural Outlook Board.

Compared with last month's forecast, the herds are reduced marginally, and the milk per cow growth rate is slightly lower.

Relatively large supplies of butter are pressuring butter prices and forecast prices are reduced to reflect further pressure through early 2006. Cheese, nonfat dry milk, and whey price forecasts are raised from last month as demand is expected to remain firm.

Class IV prices are lowered in 2005 but the Class III price is unchanged. The forecast for both 2006 Class III and Class IV prices are raised from last month. The all milk price for 2005 is forecast lower at $15.10 to $15.20 per cwt, but the 2006 forecast is raised to $13.35 to $14.15 per cwt.

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