Dairy Product Prices Pressured

WASHINGTON - Dec 11/07 - SNS -- Dairy product prices are still expected to be lower in 2008 than this year in the face of improved milk production levels, according to the latest forecasts from the USDA's World Agricultural Outlook Board.

Forecasts for 2007 and 2008 milk production are raised slightly as milk per cow rates are recovering from early year weakness. Ending stocks on a fat basis are unchanged from last month, but skim-solids stocks are raised because nonfat dry milk (NDM) stocks have remained higher than expected.

Dairy prices are changed in 2007 and 2008. Stronger cheese price forecasts are expected to result in higher Class III price forecasts in both years. The Class IV price forecast is lowered for 2007 but unchanged for 2008. Forecast butter prices are raised slightly in both years.

Weaker NDM prices in November and December result in a lower Class IV price for 2007. However, a weaker forecast NDM price in the first half of 2008 is largely offset by a higher forecast NDM price in the second half of the year as world supplies remain tight. The 2007 all milk price is forecast 10 cents higher than last month at $19.05 to $19.15. In 2008, the all milk price is forecast at $18.00 to $18.80 per cwt.

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