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Growing herd size dropping milk price forecast

USDA yet again raised its 2021 milk production estimate as farmers continue to add cows to their herd.

In its February supply and demand report, USDA forecast cheese and butter prices lower because of current prices, increased production, and larger stocks.  Nonfat dry milk and whey prices are projected higher because of strong demand. 

The Class III price was lowered because of expected lower cheese prices along with the Class IV prices because of lower butter prices.

Luke Fuess with Highground Dairy tells Brownfield the supply and demand report lags behind what’s been happening recently in dairy markets.

“We’ve seen lower cheese in recent weeks,” he says.  “We’ve seen lower nonfat dry milk in recent weeks partly as a reflection of challenged exports and stronger production.”

He’s calling for increased milk production to weigh on prices through the first half of the year.

The 2021 all milk price forecast declined 50 cents to $17.55 per hundredweight.  

The 2021 fat basis export estimate was increased on higher butterfat shipments expected as well as the skim-solids basis exports because of strong international demand.

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