Sharply higher dairy product prices projected

by Ron Sterk
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WASHINGTON — Sharply higher milk and dairy product prices were projected for the remainder of 2007 by the Economic Research Service of the U.S. Department of Agriculture.

In its May 21 Livestock, Dairy and Poultry Outlook, (Click here to read outlook) the E.R.S. said higher feed costs were being offset by much higher-than-expected prices for dairy products in the balance of 2007 and into 2008. However, the higher prices could prompt expansion in dairy cow numbers and milk per cow in 2008, causing prices to moderate next year, the E.R.S. said.

The E.R.S. projected nonfat dry milk (N.D.M.) prices to average $1.375@1.415 a lb in 2007 and $1.41@1.48 in 2008, compared with 88.7c in 2006. Dry whey prices were projected to average 68@71c a lb in 2007 and 66@69c in 2008, compared with 32.9c in 2006. Supplies of N.D.M. and other dry milk products will remain tight through 2007 and into 2008, the E.R.S. said. Higher dry whey prices were driven in part by new uses and products.

Butter prices were projected to range from $1.325@1.405 a lb in 2007 and $1.33@1.46 in 2008, compared with $1.219 in 2006. Cheddar cheese was projected to range from $1.475@1.525 a lb in 2007 and $1.435@1.525 in 2008, compared with $1.247 in 2006. Commercial use of butter in the first two months of 2007 was up 20% from the same period last year, the E.R.S. said. Cheese use was up 3.5% during the same period.

Milk production was projected at 184.2 billion lbs in 2007, up 1.4% from 2006. Production in 2008 was projected at 187.7 billion lbs. Prices for all types of milk were projected to average $17.05@17.55 in 2007 and $17@18 in 2008, compared with $12.90 in 2006, the E.R.S. said.

In its May 18 Milk Production report, (click here to read report) the National Agricultural Statistics Service of the U.S.D.A. estimated April milk production in the 23 major states at 14.4 billion lbs, up 1.6% from April 2006. Milk production in the first four months of 2007 was 56.6 billion lbs, up 1.3% from 2006.

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