02/27/06 USDA predicts falling dairy prices in `06

When USDA analyst Shayle Shagim addressed the Ag Department's Outlook Forum he told dairy producers in the audience they might not like what he was about to tell them. Shagim was about to predict another dip in dairy prices to producers because of increased output. SHAGIM "The good returns that we have seen over the past two years have encouraged the sector to expand plus a combination of relatively good feed costs, and return to normal allocations of BST from previous years." Shagim says put that all together and he's predicting a three percent production growth for 2006. That in turn will mean lower prices to farmers because the demand isn't there and won't grow by three percent this year. SHAGIM "Prices that are going to be lower than those we saw in 2004 or 2005 but still well above where we were in the early part of the decade. 2004 if you want to think about it was a time when prices rose to ration supplies, demand was much stronger than supply. 2005 we began see prices come into line, we saw prices come down to balance the supplies with demand." He did get mild applause when he talked about an all milk price of $13.45 per hundredweight. Today's Idaho Ag News Bill Scott