The milk production estimate for 2010 and forecast for 2011 are raised from last month. Supply and use estimates for 2010 are adjusted to reflect production and stock estimates for December. Milk production is forecast higher for 2011 based on higher-than-expected January 1 dairy cow and dairy replacement heifer estimates. Import and export forecasts are unchanged from last  month.

Product prices are forecast higher this month. Strong international demand, coupled with  improving domestic demand is expected to help support prices. Butter prices are also benefitting from tight beginning stocks. Class III and Class IV price forecasts are raised to reflect higher  product prices. The all milk price is forecast to average $17.70 to $18.40 per cwt for 2011.