Despite rising feed prices and a hot summer, milk production continues to increase this year, with forecast milk output rising 1.5 percent in 2011 to 195.7 billion pounds, according to USDA.

Cow numbers continue to increase more than expected and output per cow appears to have rebounded from the July and August heat. Cow numbers are projected at 9.2 million head this year, and output per cow was raised slightly from last month to 21,280 pounds for the year.

USDA reports that milk output in August was up over 2% from a year ago, output per cow up 18 pounds over last year, and the dairy herd is now 102,000 head more than 2010 with 3,000 head added just during August.

Prices have been very strong and this year’s average all milk price is expected to set a record $20.40 cwt, up over $4 from last year. “A very strong price and an incentive for milk producers,” said USDA Outlook Board Chairman Gerry Bange. However, Bange says they are revising the 2012 outlook downward. “While we do expect production to be up 1.4%, we think it will be about 300 million pounds less than we thought,” he said. “The reason we came off the 2012 forecast is because we are looking at weaker milk prices for 2012 at $18.30 for the all milk price, and we do expect the higher grain prices to work their way through the system.”