USDA: Milk Prices May Increase On Smaller Herd

Many analysts expect the U.S. dairy herd to shrink this year, which could push milk prices higher.  They may be a month late, thanks to the government shutdown, but the USDA has finally released the milk production numbers from 2018.  Last year, dairy operations turned out 218 billion pounds of milk 1% higher than 2017's figure, and they did it with a slightly smaller herd but milk per cow was up 1%.  When looking ahead to 2019, milk production is expected to grow again, however, "We made some adjustments this month, actually trimmed that growth a little bit."

USDA's Outlook Board Chairman Set Meyer said the new forecast comes in at 219.7 billion pounds, cutting the forecast by 300 million pounds this month.

"Not on milk per cow but on cow numbers, you know, when you observe the dairy cow slaughter it's running at a pretty strong pace."

But milk output will top last year by 2.3 billion pounds or about 1%, but Meyer says producers could still see higher milk prices this year, driven by butter and cheese.

The milk price, he noted, could top last year by about 7%.

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