Modest Hike in U.S. Milk Supply

WASHINGTON - Jul 12/06 - SNS -- U.S. domestic milk production is expected to be slightly bigger than thought this year, but the 2007 forecast is unchanged, according to the latest outlook from the USDA's World Agricultural Outlook Board.

Milk cow numbers and milk per cow forecasts for 2006 are raised fractionally. Higher forecast milk production and relatively large dairy product supplies are expected to pressure prices.

Cheese, butter, and nonfat dry milk (NDM) price forecasts are reduced, but demand for whey remains strong. The Class III price forecast for 2006 is raised from last month as higher whey prices more than offset a slightly weaker cheese forecast.

The Class IV price forecast is reduced slightly due to lower butter and NDM prices. The all milk price for 2006 is increased to $12.50 to $12.80 per cwt. The forecasts for 2007 Class III prices are raised due to higher whey prices, but the Class IV and the all milk price forecasts for 2007 are unchanged.

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