Arlington, Va., Feb. 22 - U.S. milk production in 2008 is expected to increase by around 2.7% as the dairy sector entered the year in an expansionary mode but the larger output in seen weighing on prices.
The increase in production reflects both expanded cow numbers and continued but slower growth in output per cow, said Shayle Shagam, livestock analyst with the U.S. Department of Agriculture's World Agricultural Outlook Board, said in prepared comments at the Agricultural Outlook Forum.
"Relatively high milk prices in 2007 allowed many dairies to build capital and plan for expansion," Shagam said. Despite higher feed and energy costs, which may be "dissipating some of the capital," the Jan. 1 cattle inventory report showed a 1% increase in the dairy cow herd, he said. Producers expect to add 3% more heifers to the dairy herd in 2008.
Milk prices are projected to decline in 2008, with the all milk price seen averaging from $16.85 to $17.55 per hundredweight, down from the record high of $19.13 in 2007. Still, these prices for 2008 would be the second highest ever.