Improving U.S. Milk Output

WASHINGTON - May 9/08 - SNS -- Milk production in the United States is forecast to increase fractionally in 2009 reflecting lower cow numbers and minimal gains in milk per cow, according to the latest supply and demand forecasts from the USDA's World Agricultural Outlook Board.

Forecast milk production in 2008 is lowered slightly from last month. Milk per cow in the first quarter was weaker than expected. Price forecasts for most products are raised sharply from last month as demand for all products remains strong. Fat basis exports are robust although exports on a skims solids basis are forecast weaker than last year, NDM exports are helping support prices. Class III and Class IV prices are raised and the all milk price is forecast to average $17.95 to $18.45 per cwt.

Although producers continue to add cows in 2008, poor returns are expected to end the expansionary phase of dairy cow inventories. Commercial exports are forecast to remain relatively robust by historical standards but will likely be lower in 2009 as production in competing supplier countries recovers and tighter U.S. production increases competition between domestic and export uses.

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