01/24/08 Dairy price projections for 2008

Retail food prices in 2007 shot up four percent, the largest yearly increase in 17 years. US Department of Agriculture economist Ephraim Leiptag says milk led the way. LEIPTAG "Our dairy prices were up quite a bit, over seven percent increase in 2007." The nation's dairies did increase milk production last year by about two percent but high demand for milk, high cost of dairy feed and skyrocketing fuel costs to get the milk to market sent farm level milk prices up 48 percent. LEIPTAG "We are projecting a much more moderate increase in dairy right now two to three percent. It looks like farm prices are softening a little bit and that will lead to kind of back to normal rates of inflation for dairy and maybe a little bit lower than normal because we had such a high price in '07." World Outlook Board chairman Gerry Bange says those high input costs will have an impact on 2008 milk production. BANGE "We expect that this will result in a slower growth in the cow numbers, perhaps slower growth in the output per cow. As we look at the milk feed-price ratio we would expect to see these things slow down given the increases in feed prices that we are seeing." The all-milk price for 2008 has been slightly lowered to an average estimate of $18.30 per hundredweight compared to the 2007 all milk estimated year end price of $19.15." Today's Idaho Ag News Bill Scott