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U.S. Milk Production Surges While World Dairy Markets Remain Strong

Aug 27, 2007

U.S. Milk Production Surges While World Dairy Markets Remain Strong

By Bob Yonkers, IDFA Chief Economist, Ph.D.

Although total U.S. milk production in the first six months of 2007 increased barely 1% over the same period last year, it surged in July, increasing 3.7% above last year, according to the U.S. Department of Agriculture (USDA). Most of this growth was due to an increase in milk output per cow, up 3.4%, because the number of milk cows was only 0.3% higher than last year.

While milk production was higher in every month this year, the growth through June was relatively steady, with increases ranging from 0.4 % (February) to 1.6% (January). This changed in July, when several states reported big jumps in production.

States with the largest July increase in milk production included California (up 10.6%), Arizona (plus 10.4%), Colorado (up 6.3%) and Idaho (5.5% higher), all Western states that have posted increases in milk production for many years. But also on the list of growing areas are several Midwestern states that haven't had long runs of growth: Michigan (up 7.2%), Ohio (up 4.7%), Iowa (up 4.6%) and Wisconsin (up 4.1%).

Meanwhile, USDA reported that world butter and cheddar cheese prices for the two-week period ending August 16 reached the highest level on record. The midpoint of the reported export price range for butter was $1.59 per pound for the Oceania region (more than double the $0.74 for the same time period last year) and $2.61 in Western Europe (more than three times the $0.82 reported last year), where dairy product demand has far outstripped milk production this year. The Oceania region export price for cheddar cheese was $2.13 per pound, nearly one dollar per pound higher than the $1.18 last year at this time.

The strong world market, coupled with growth in milk production in the United States, has led to strong growth in U.S. dairy exports this year. For more information, see "U.S. Dairy Exports Reach Record Levels for Fourth Consecutive Year," (News Update, August 20, 2007)

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Posted August 27, 2007

Dairy Delivers