Chicago, Aug, 5 - A U.S. dairy group said on Wednesday it would liquidate 86,710 cows in its second largest herd retirement plan since 2003 aimed at lifting milk prices, which have slumped about 50 percent since peaking in 2007.
Cooperatives Working Together said it had tentatively accepted 294 bids from producers to sell their cows -- which account for 1.8 billion pounds of milk -- under the group's third herd retirement plan in the past nine months.
The previous retirement round, completed in July, removed a record 101,000 cows accounting for 1.96 billion pounds of milk.
"These two summer 2009 herd retirements, combined with the USDA's recent price support increases, should result in very positive movement in dairy farmers' milk prices," Jerry Kozak, president and CEO of National Milk Producers Federation, which administers the CWT, said in a news release.
Combined herd retirements equal a total production capacity of 4.8 billion pounds of milk being removed since December 2008, the CWT said in the news release.
Milk futures at the Chicago Mercantile Exchange were lifted by the news before further offers in the cash cheese market weighed on the futures market.
Futures prices, after trading above $20 per cwt from mid 2007 to mid 2008, fell to under $10 in February and have been in the $9 to $11 level since then.
This was the eighth CWT herd retirement in the past six years, and the first to feature a maximum acceptable bid threshold of $5.25 per cwt.
"There is still an interest on the part of our members to use CWT to remove more cows, even though the program has been very active in 2008 and to date in 2009," Kozak said.
"CWT stands ready to conduct yet additional herd retirements later this year in order to help address the severe supply-demand imbalance that has depressed farm-level milk prices.
"We intend to use all the resources at our disposal to help farmers deal with this severe economic crunch that they're confronting."