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Milk production inches higher in June

Recent price strength and expectations for greater domestic demand boost dairy product prices.

The U.S. Department of Agriculture noted in the latest “Milk Production” report that milk production in the 24 major producing states totaled 17.4 billion lb. during June, up 0.5% from June 2019. USDA also revised the May production number to 18.0 billion lb., down 0.5% from May 2019 and down 0.5% from the 1% increase initially reported in June.

Production per cow in the 24 major states averaged 1,974 lb. for June, unchanged from June 2019. The number of milk cows on farms in the 24 major states was 8.83 million head, 43,000 head more than June 2019 but 9,000 head less than May 2020.

Total U.S. milk production during June was 18.3 billion lb., up 0.5% from the same period in 2019.

USDA NASS7.20 milk production.png

Milk production in the U.S. during the April-to-June quarter totaled 55.9 billion lb., a slight 0.4% rise from the same quarter last year. The average number of milk cows in the U.S. during the quarter was 9.36 million head, 12,000 head less than the January-to-March quarter but 31,000 head more than the same period last year.

USDA’s latest “Livestock, Dairy & Poultry Outlook” projects 2021 milk production to be 225.6 billion lb., based on higher expected milk per cow of 24,050 lb. per head (up 20 lb.). The 2021 forecast for the number of milk cows remained unchanged at 9.380 million head.

USDA relayed that recent price strength and expectations for greater domestic demand have led to a higher cheese price forecast for 2020 of $1.905/lb., 24.5 cents higher than the June forecast. The butter price forecast was also raised to $1.685/lb., a half-cent higher than the previous forecast.

Due to higher expected export levels, USDA also raised the nonfat dry milk price forecast to $1.040/lb., 4.0 cents higher than the forecast last month. The dry whey price forecast for 2020 was lowered 0.5 cent to 0.355/lb.

Because of the higher cheese price forecast, USDA raised the Class III price forecast for 2020 to $18.00/cwt., $2.35 higher than last month’s forecast. Expectations for higher butter and nonfat dry milk prices resulted in a Class IV price of $13.95/cwt., 40 cents higher than last month’s forecast. The all-milk price forecast for 2020 is $18.25/cwt., an increase of $16.65/cwt. from the June forecast.

According to USDA, the higher dairy product price forecasts in 2020 are expected to continue into next year as well. The 2021 price forecasts for cheddar cheese, butter and nonfat dry milk have been increased from last month’s forecast to $1.725 (up 11.5 cents), $1.715 (up 2.5 cents) and $1.010/lb. (up 4.0 cents), respectively. The forecast for dry whey was unchanged at 34.5 cents/lb. With the higher cheese price projection, USDA put the Class III price forecast for 2021 at $16.20/cwt., $1.10 higher than last month’s forecast. With higher expected prices for butter and nonfat dry milk, the Class IV price forecast was raised by 45 cents to $13.80/cwt. The 2021 all-milk price forecast was raised to $17.05cwt., up from the June forecast of $16.20/cwt.

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