Tuesday, July 21, 2009

Dairy News

Market Down, Milk Production Down

Boise--Idaho milk production dropped in June to 1.04 billion pounds, a 0.9 percent decline from the same month last year, and down 1.7 percent from May 2009, according to the National Agricultural Statistics Service.

“There is no doubt that the current economic situation has been disastrous for the dairy industry and in the short term we will likely see more producers exiting the industry. A sign of distress is the herd liquidation that is beginning to occur and this has started to affect milk supply," said Economist Bob Smathers of the Idaho Farm Burea.

May 2009 milk production was revised to 1.06 billion pounds, up 9 million pounds from the preliminary level. Average milk production per cow in June 2009 was 1,880 pounds, down 20 pounds from June 2008. The average number of milk cows during June was 552,000 head, down 1,000 head from the revised May 2009, but up 1,000 head from June 2008.

"On the positive side," said Smathers, "A lower milk supply and projected higher domestic demand will likely raise prices toward the end of 2009 and beyond and this will help those producers that can hold on. But it is still speculation at this point as to how much prices will increase over the next 12 months.”

Milk production in the top 23 dairy States last month 14.7 billion pounds, down 0.1 percent from June 2008. May revised production at 15.5 billion pounds, was up 0.5 percent from May 2008. The May adjustment showed an increase of 46 million pounds or 0.3 percent from last month's preliminary production estimate.Production per cow in the 23 major States averaged 1,746 pounds for June, 10 pounds above June 2008. The number of milk cows on farms in the 23 major States was 8.44 million head, 56,000 head less than June 2008, and 29,000 head less than May 2009.

According to the Cattle Network, The normal seasonal decline in milk production and the seasonal strong fall sales of dairy products will strengthen milk prices in the months ahead. But, milk production may need to fall 2 to 3% below year ago levels to get the milk price at a level to stop the financial stress now being experienced by dairy producers. That means the Class III price needs to get to at least the $15.00 to $16.00 range. This may not happen until 2010.

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