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US Milk Production Expected To Rise 2.2% A Year Through 2026

Domestic Cheese, Butter Demand, Exports Projected To Grow Over Next Decade; Milk Prices Expected To Increase

US milk production is expected to increase at a compound annual growth rate of 2.2 percent per year over the next 10 years, according to the USDA Agricultural Projections to 2026 report released Thursday by the US Department of Agriculture.

That would mean US milk production in 2026 would total 259.7 billion pounds, up 47.2 billion pounds from last year’s record output.

USDA’s long-term agricultural projections presented in the report are a departmental consensus on a long-run scenario for the agricultural sector. Projections in the report were prepared during the October through December 2016 period, with the 2014 farm bill assumed to remain in effect through the projection period.

After a long downward trend, US milk cow numbers reached a low point of 9.0 million head in 2004. Since then, cow numbers have fluctuated but trended slightly upward, reaching 9.3 million head in 2015.

Milk cow numbers are expected to increase to almost 9.5 million head by 2022 due to rising milk prices and relatively low feed prices. Gains in milk per cow will contribute to a slight reduction in milk cow numbers in the following years, declining to about 9.4 million head by 2026.

Through 2026, output per cow is projected to grow at an average annual rate of 1.9 percent, faster than the 1.4 percent annual growth rate from 2005 to 2015.
Relatively low projected feed prices, advances in technology, genetic developments, and increased economies of scale due to consolidation drive this increased output, the report said.

Domestic demand grows at a strong pace, with commercial use of dairy products rising faster than the growth in US population over the next decade.

Cheese demand is expected to increase due to greater consumption of prepared foods and increased away-from-home eating.

Butter demand is also expected to grow, in part due to changing consumer perceptions about the health implications of consuming milkfat.

The decline in per capita fluid consumption of fluid milk products is expected to continue.

Commercial exports of US dairy products are projected to grow over the next 10 years, led by the exports of products with high skim-solids content, such as nonfat dry milk and whey products. By 2026, dairy exports are expected to reach 4.9 percent of milk production on a milkfat milk-equivalent basis and 21.0 percent on a skim-solids milk-equivalent basis.

After a decline in prices from 2015 to 2016, nominal farm-level milk prices are expected to increase over the projection period largely due to increases in demand, both domestic and international. After 2016, dairy product prices generally increase faster over the first few years and grow more slowly in the second half of the projection period.



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