Rising Milk Output Pressures Prices

WASHINGTON - Mar 11/08 - SNS -- Forecasts for 2008 milk production are raised as continued growth in cow numbers is expected to more than offset slower growth in output per cow, according to the latest supply and demand forecasts from the USDA's World Agricultural Outlook Board.

"Producers continue to respond to the strong returns in 2007 but high feed prices are likely to slow the rate of gain in milk per cow," the USDA said.

Both Class III and Class IV price forecasts for 2008 are adjusted from last month. The Class III price forecast is raised as cheese prices are forecast higher which more than offsets a lower forecast whey price. The Class IV price forecast is lowered from last month as lower forecast nonfat dry milk (NDM) prices more than offset a higher butter price forecast.

Despite large stocks of butter, prices have remained relatively strong and are forecast higher for the year. However, NDM prices have declined during the first quarter and the 2008 price forecast is lowered from last month. The all milk price forecast for 2008 is raised to $17.30 to $17.90 per cwt.

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