24. Effect of the CWT Program on the US All Milk Price * * - Only includes 2008 CWT export assistance as of 10/16/2008 * - Includes export assistance through 10/16/2008 Year 2003 2004 2005 2006 2007 2008 * US All Milk Price $12.55 $16.13 $15.19 $12.90 $19.13 $19.08 CWT Herd Retirement Impact $0.05 $0.16 $0.44 $0.55 $0.62 $0.57 CWT Export Assistance Impact NA $0.01 $0.01 $0.09 $0.16 $0.14 TOTAL CWT Impact $0.05 $0.17 $0.45 $0.64 $0.77 $0.71
25. My Forecast 2007 2008 2009 Milk Cows 9,153 9,265 9,216 (thou. head) Milk Production 185.6 189.6 190.9 (bill. pounds) All Milk Price 19.13 18.45 17.10 (dollars per cwt.) Class III Price 18.04 17.55 16.20 (dollars per cwt.) Class IV Price 18.36 15.20 13.80 (dollars per cwt.)
Feed costs have exploded for the dairy industry over the past four years. This rise in feed costs suggests that milk prices will not likely revisit lows established in 2003 any time soon but that dairy producers will become stressed quickly if milk prices fall far from current levels.
Milk Cows have been rising since January 2005. A much different story than has been the case historically. It is driven in large part by strong international demand for dairy products. It used to be this was a domestic sector that grew about one percent per year so if milk yields advanced two percent each year it meant that cow numbers needed to decline by one percent per year to keep domestic supply and demand in balance. That explains the decline in cow numbers over the 1980s and 1990s
These next two slides shows where the growth in cow numbers is occurring in the U.S. California and Idaho continue to remain strong growth states. Texas and Wisconsin show growth in the more recent period.
Milk yield growth has been slowing as a result of high feed costs and declining use of rBST. The February 2008 data is not adjusted to account for leap year.
Increases in both cow numbers and yields results in increased milk supplies. USDA currently estimates milk production at 189.5 billion pounds for 2008. Annual growth of nearly 4 billion pounds over the past four years is unusual and to continue will require continued strength in international markets
Nearly all U.S. dairy product prices are being driven by the current levels of international prices. It is important to realize how quickly global prices rose in 2007 for dairy products. If global prices decline as quickly and as far on a downturn, it will put U.S. dairy producers in a serious financial situation given high feed prices
Retail dairy prices have moved higher in this country over the past 18 months. This is resulting in weaker domestic consumption of dairy products. 2008 fluid consumption has been below year ago levels.
Exports of U.S. dairy products remain small relative to domestic production but have been growing immensely in 2008. We will show a record percentage of domestic milk supplies destined for other countries in 2008.
Luckily for dairy producers, the strong international demand for dairy products lifted farm-gate milk prices to record levels over the past 18 months. It is the primary reason this livestock industry has not seen the serious financial stress from high feed costs that have been the dominant news in the other meat sectors
Luckily for dairy producers, the strong international demand for dairy products lifted farm-gate milk prices to record levels over the past 18 months. It is the primary reason this livestock industry has not seen the serious financial stress from high feed costs that have been the dominant news in the other meat sectors