06/15/07 Record high all-milk price forecast

Washington Ag June 15, 2007 Nothing short of astonishing is how USDA chief economist Keith Collins describes the story of milk markets over the past two years. Case in point is the recent all-milk price projection in USDA's June production forecast. Collins: "This year we are looking at a milk production increase of 1.4% which is generally on trend. Yet we are now forecasting the all-milk price at a record high $18.75 a hundredweight. We have raised that $1.45 a hundredweight from last month's forecast." Collins says strong demand internationally for non-fat dry milk, the increased use of dry whey by food producers for consumer goods such as energy bars, yogurt and sports drinks as well as international developments in dairy have led to the record price projection. Collins: "There have been continuing problems in Australia and New Zealand because of the terrible drought that Oceania suffered last year, combined with our own demand, which has been pretty good for dairy products as well." The Washington Agricultural Statistics Service says the mid-May all-milk price for the state's producers was $18.10 a hundredweight. That compares to just $11.60 a hundredweight in May of 2006. But Input costs are also up. For example, the National Ag Statistics Service says the price index for feed grains and hay is 48 percent above a year ago. I'm Bob Hoff.