Milk Prices

According to the USDA Dairy Outlook, "First-quarter milk production is forecast to increase just under 5 percent over 2005– 2 percentage points over the 5-year average The increase in production has been aided by an unusually mild winter, adequate forage/ hay supplies, and relatively inexpensive feed ration inputs. Higher fat tests and unseasonably heavy milk per cow have also been observed in 2006. These data may suggest an uncharacteristic bunching in the calving cycle that could result in a proportionally larger number of cows at peak lactation, contributing to the relatively larger-higher first-quarter production, while the higher fat tests boost milkfat supplies. Following surprisingly weak fourth-quarter commercial use, processors are now faced with larger-than usual milk supplies to handle in the first quarter."

According to Bob Cropp's Outlook, "The March 17th USDA production report for 23 states shows a continuation of very strong milk production. Compared to year ago, milk production was up 5.5% in January and another 5.9% in February. The increase was due to 1.5% more milk cows and production per cow up 4.3%. Future milk production is very likely to slow as we move through the year and bringing with it some improvement in milk prices. Cow numbers may start to decline by the last quarter of the year. Cow slaughter, which has been running about 13% below a year ago, may pick up latter in the year. Increases in milk per cow are not likely to continue at the 4% rate. The lower milk prices have decreased the milk- feed-price ratio below 3.0. And of course the summer weather can have a big impact on milk per cow."