From the USDA’s October 2009 “Livestock, Dairy & Poultry Outlook,” a report from the Economic Research Service.
Dairy: Contraction in the U.S. dairy herd leads to the second year of lower forecast milk production. Lower production, combined with stronger than-expected export prospects, will lead to higher milk and dairy product prices next year.
The September Milk Production report shows slight milk production declines in both July and August. The number of cows in the national herd has shown a month-over-month decline since January, and the year-over-year decline in cow numbers more than offset the incrementally rising output per cow in the second half of the year. The prospects for the rest of 2009 and 2010 are for cow numbers to continue to decline and for production per animal to continue increasing. In 2010, the U.S. dairy herd is expected to average below 9 million for the year. The production increase per cow per day is expected to be about 1 percent in 2009, well below the 5-year-average rise. In 2010, production per cow is expected to rise by 1.8 percent during the year, above the 5-year average.
Export prospects are improving. Economic recovery has exceeded expectations in several countries in recent months with the result that demand for dairy products has improved. (…more)