02/29/08 Lower producer milk prices forecast

Washington Ag February 29, 2008 In its most recent supply and demand report the USDA raised its forecast for 2008 milk production as continued growth in cow numbers is expected to more than offset slower growth in output per cow. The department says producers continue to respond to the strong returns of 2007. The new outlook however is forecasting lower producer prices. USDA Outlook Board Chairman Gerry Bange says Class III milk is now expected to average $15.80 a hundredweight this year. Bange: "Class III milk of course is suffering the impact one might say from somewhat weaker whey prices. The demand for whey has dropped off fairly sharply. It is interesting because when the prices were much, much higher we saw much more buying interest than we are seeing now at lower prices. But we expect that some of buying interest will return when these stockpiles that these people amassed at higher prices begin to be worked down. Similarly if you look at the Class IV price that is down $1.80 down to $15.45 and the reason is, is that largely driven by the non-fat milk price which has come off fairly sharply." USDA recently reported that January milk production in Washington was up 4.8 percent from January of 2007 on increased cow numbers and output per cow. I'm Bob Hoff.