Milk Production Gains Strong - Outlook for Prices is Revised

Yikes! The USDA World Agricultural Supply and Demand Report is now out and in that report, the projected milk production for the United States is set at 161.5 billion pounds for the marketing year ending September 1999. This is up 3.2 percent over the previous marketing year. If we achieve this level of increase, this will set a record level of production for the United States! The 3.2% expansion will be the largest such expansion since the production rebound of 1991. The report also projects that for the marketing year 2000, milk production, driven by productivity increases, will be up another 2.4 percent. While this is good news for consumers, if it comes to pass, it is not so good news for producers Why? With this level of production expansion, and total consumption projected to increase only 2 percent, there will be real downward pressure on milk prices!

What is Going on with Production Anyway?

Milk production in the 20 selected states was 12.0 billion pounds in April. This is according to the USDA's "Milk Production Report", released May 17th. Milk production for these 20 states is up 3.2 percent over a year ago. Cow numbers were up 4,000 head over March and down only 1,000 head from a year ago. On the productivity side of things, milk per cow expanded 3.5 percent over a year ago. Corn prices per bushel are expected to remain in the $1.95 to $2.05 range, as ending corn stocks are forecast to be 1.77 billion bushels, up 36% over last year and twice that of two years ago