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 Strong Domestic Sales and Exports Lead To Record-Breaking Prices, But Changes May Be On The Way  

August milk production in the 23 major milk-producing states, at 16.2 billion pounds, was 2.6 percent higher than August 2013, USDA National Agricultural Statistics Service reported on September 19.


Many states saw healthy increases in milk production. Topping the list was Florida, up 8.4 percent, followed by: Colorado, up 8 percent; Michigan, up 6.7 percent; Texas, up 6.2 percent; Kansas, up 5.8 percent; and Indiana, up 5 percent.


Increases in the top five dairy states were more modest, increasing 1.4 percent in California, 1.2 percent in Wisconsin, 2.7 percent in New York, 3.1 percent in Idaho, and 0.6 percent in Pennsylvania.

Record milk prices along with lower feed costs have resulted in "very favorable" margins for dairy producers to increase U.S. milk production, said Bob Cropp, professor emeritus, University of Wisconsin, in his Dairy Situation and Outlook report of Sept. 19.


The all-milk price in September will be near $26 per hundredweight, almost $6 higher than a year earlier. The September Class III price will be near $24.55, the highest this year and $6.40 above a year ago. The Class IV price will be near $22.45, $3 higher than a year ago, Cropp said.

So far 2014 has been a very good year for dairy prices and margins, but it looks like things are about to change. The USDA’s Outlook Board has just called for the All Milk price to drop $4 per cwt in 2015, while some industry analysts feel it could fall even farther than that. 


Cropp believes dairy product prices could beging their decline as soon as December of this year with butter falling from record highs to $1.90 by the end of 2014. He is also sees cheese taking a similar path with prices starting below $1.90 in 2015. As a result he feels the class 3 will dip to $17.00 by spring into summer and lower prices could follow.


Cows in the 23 major states numbered 8.58 million head in August, down 1,000 head from July and up 60,000 head from August 2013.

Per-cow production, at 1,885 pounds, was up 35 pounds from August 2013 and the highest for the month of August since the reporting series began in 2003. That record-high, per-cow production followed four month of series highs, NASS reported.

Milk production was up year-over year in all of the 23 states sans Oregon, which at 214 million pounds was down 0.5 percent on the same number of cows. Per-cow production was also primarily up but down 10 pounds in both Oregon and Texas.

Cow numbers rose year over year in 11 of the top 23 states with the largest increases in Texas, up 30,000 cows, and Michigan, with 13,000 additional cows. Decreases in cow numbers in nine states were led by Minnesota and Ohio, both down 5,000 cows.

Milk production in California was up 1.4 percent to 3.45 billion pounds, up 30 pounds per cow, with 2,000 fewer cows. Production in Idaho was up 3.1 percent to 1.22 billion pounds, up 40 pounds per cow, with 2,000 fewer cows.

Washington had an additional 4,000 cows this August and posted a 2.4 increase in production to 560 million pound with an extra 20 pounds per cow.

Source: NASS and Dairy Situation and Outlook

Posted on Thursday, September 25, 2014 (Archive on Thursday, October 02, 2014)
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