The USDA has once again lowered its forecast for 2012 milk prices.
This morning, the USDA’s “World Agricultural Supply and Demand Estimates” report projects that the all-milk price in the U.S. will average between $17.25 and $17.75 per hundredweight this year. That is a downward revision from last month’s forecast of $17.60 to $18.20.
As recently as the January report, USDA was predicting an all-milk price of between $18.30 and $19.10.
“With higher forecast 2012 milk production and weaker than expected product demand, price forecasts for cheese, butter, (nonfat dry milk), and whey are lowered,.” the USDA said in today’s report. “As a result, both Class III and Class IV price forecasts are reduced from last month,” which, in turn, will lower the all-milk price estimate.
The Class III price is expected to average between $16.10 and $16.60 this year, compared to last month’s estimate of $16.35 to $16.95.
High milk production is largely to blame for the bearish price forecasts.
In February, for instance, milk production across the entire U.S. was up 4.3 percent compared to the same month a year earlier. (The calculation was adjusted for Leap Year). That was a hefty increase and marked the 25th month in a row that production was up on a year-over-year basis.