Market trends

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Less cows, but better milk prices in the US

US milk production in the first half of 2018 is forecast to increase over the first half of 2017 by 1.6%. This is according to the December dairy outlook from the USDA.

Although milk prices in the US are expected to decline from 2017 to 2018, relatively low feed prices are expected to encourage expansion of the milk cow herd and greater yield per cow, although at a slower rate than forecast in November.

Lower milk prices

With recent price declines in dairy products and continued high stock levels, the all-milk price for the fourth quarter of 2017 was $ 17.75 – $ 17.95 per cwt, a reduction from the forecast of $ 17.85 – $ 18.15 in the month before. The 2018 all-milk price forecast is $ 16.65 – $ 17.45 per cwt, a reduction from the earlier forecast of $ 16.90 – $ 17.80.

Outlook for dairy feed prices

The 2017/18 price forecast for corn is $ 2.85 – $ 3.55 per pound, unchanged from the month before at the midpoint of the range. The soybean meal price forecast for 2017/18 is $ 295 – $ 335 per short ton, unchanged from earlier forecast. The alfalfa hay price in October was $ 152 per short ton, $ 3 more than September and $ 17 more than October 2016.

Dairy forecasts for 2018

The forecast for the size of the dairy herd in 2018 has been lowered to 9.435 million head, as lower milk prices are expected to lead to slower growth in the second half of the year. Based on recent data and lower expected prices, the milk per cow forecast has been reduced to 23,250 pounds (10,546kg). With these changes, milk production is now projected at 219.3 billion pounds (99.5 billion kg) for the year, 0.4 billion pounds lower than previously forecast. The forecasts for imports and exports on a milk-fat basis for 2018 are unchanged at 6.1 billion pounds (2.77 billion kg) and 9.4 billion pounds (4.26 billion kg), respectively.

The full report can be read here.

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