Lower Milk Production Forecast in 2010
Lower forecast milk production in 2010, combined with continued recovery in dairy product exports, is expected to lift milk and dairy product prices in 2010 according to the Agriculture Department’s latest Livestock, Dairy and Poultry Outlook issued this morning. The report points out that feed costs have fallen substantially in 2009, but are unlikely to fall as much next year.
The benchmark 16-percent protein ration value is projected to average in the mid-$7.00 per cwt range this year compared with over $9.00 per cwt in 2008. In 2010, the price should continue to fall, but not by nearly as much. Falling soybean meal prices will constitute a large share of the drop. Corn prices for the 2009/10 crop year are forecast to decline to $3.25 to $3.85 per bushel compared with the 2008/09 crop year average of $4.06 per bushel. Soybean meal prices are forecast to decline from $331 per ton average in 2009/10 to a forecast $260, with $310 per ton in 2010/11.
The U.S. dairy herd is forecast to continue to contract in 2010, with most of the herd reduction coming in early 2010 and attenuating later in the year. The report also includes a special article addressing the Cooperatives Working Together program.