High Feed Prices Limit Milk Output

WASHINGTON - Jun 10/08 - SNS -- Milk production forecasts for 2008 and 2009 are reduced primarily because high feed prices are expected to limit growth in milk per cow, according to the latest forecasts from the USDA's World Agricultural Outlook Board.

For 2008, cow numbers are fractionally lower reflecting expected cow removals through the Cooperatives Working Together (CWT) program. Commercial exports are forecast higher in 2008 as sales have been stronger than expected. However, with relatively tight supplies forecast in 2009, the export forecast for 2009 is unchanged.

Forecasts of domestic disappearance of fat and skim solids are reduced from last month. Tighter supplies of dairy products and competition between export and domestic markets are expected to result in relatively strong prices.

Dairy product prices are forecast higher in both 2008 and 2009. Cheese prices are forecast higher in both years, which coupled with higher whey price forecasts, lead to an increase in the forecast Class III price. The butter price forecast is raised for 2008 as demand remains robust in the face of relatively large supplies.

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