Higher milk prices ahead, but . . .

Fortunately, higher milk prices are on the horizon. However, they may not be as high as they might have been, and, certainly, won't be what a lot of us would like to see.

Two developments that are dampening the milk price outlook is that cow numbers are not declining as fast as they might, and milk per cow is expected to climb with some strength next year.

The USDA's recently published outlook report predicts that cow numbers will continue to decline slowly during the rest of 2009 and during 2010. In 2010, the average size of the national dairy herd is expected to average below 9 million cows. That would be the first time that has happened in decades.

On the other hand, the rise in milk production per cow is expected to be 1 percent during 2009 and go up another 1.8 percent during 2010. That increase for 2010 is above the five-year average gain in milk per cow.

The decline in cow numbers will not be enough to offset the rise in milk per cow. Total milk production in 2010 is forecast to decline to 187.2 billion pounds. That would be down just slightly from milk production for 2009 projected to be 188.9 billion pounds. And that is why milk prices during the months ahead may not be as high as they might have been otherwise.

Thanks largely to recovering dairy product exports, we can expect dairy product prices to rise in late 2009 and during 2010. As a result, USDA is expecting the benchmark Class III price to average between $13.85 and $14.75 next year. That compares to an anticipated 2009 average Class III price of just over $11. The Class IV price next year is expected to average between $12 and $13. It should end up averaging about $10.45 this year.

The All-Milk Price during 2010 is expected to average in the range of $14.70 to $15.60, says USDA. For 2009, the All-Milk Price should average around $12.40.