USDA is staying on track with its prediction that milk prices will be about $4 per hundredweight higher a year from now than they are today.

In its “World Agricultural Supply and Demand Estimates” report released Thursday morning, the USDA projects that the all-milk price in December 2010 will range from $16.35 to $17.15, which is about $4 higher than the current price of around $12.70.

“Dairy cow liquidation has been slower than expected, and improving milk prices in 2010 are expected to diminish the rate of decline in cow numbers,” the report said. “Although milk production is forecast higher than last month, improving demand is expected to support prices for most products. Prices for cheese, nonfat dry milk, and whey are forecast higher, but butter prices are forecast slightly lower.”

Read the report.

Source: "World Agricultural Supply and Demand Estimates," USDA