2010 Dairy Outlook
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Dr. Tommie L. Shepherd
Center for Agribusiness and Economic Development
It’s Been a Heck of a Ride!
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
NASS Survey
Class Prices
Class I Price
Class II Price
Class III Price
Class IV Price
NASS Cheese Price Survey
$
1.1299
Make Allowance = .165
NASS Cheese Price Survey
$
.9649
Value of Protein in Cheese
Value of Protein on 100 lbs. of Milk
$
.9649
Yield
Factor
x 9.3452 =
$9.35
The U.S. “Milk Bucket”
Fluid Consumption
What Were the Drivers of Milk Prices in 2009?
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Milk Production (Supply)
Dairy Cow Numbers
Milk Per Cow
A Very Brief History of Milk Production
The University
of Georgia
18,000
College of
Agricultural &
Environmental
Sciences
17,000
Million Pounds
16,000
15,000
14,000
13,000
2005
2006
2007
2008
2009
12,000
Jan
Feb
M ar
Apr
M ay
Jun
Jul
Aug
Sep
Oct
Nov
Dec
U.S. Cow Numbers 2005-2009
The University
of Georgia
9,400
College of
Agricultural &
Environmental
Sciences
9,300
1000 Head
9,200
9,100
9,000
8,900
2005
2006
2007
2008
2009
8,800
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Milk Per Cow
2005-2009
The University
of Georgia
1,850
College of
Agricultural &
Environmental
Sciences
1,800
Pounds per Cow
1,750
1,700
1,650
1,600
1,550
2005
2006
2007
2008
2009
1,500
Jan
Feb
M ar
Apr
M ay
Jun
Jul
Aug
Sep
Oct
Nov
Dec
What Were the Drivers of Milk Prices in 2009?
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Milk Production (Supply)
Dairy Cow Numbers
Milk Per Cow
Milk Consumption (Demand)
Fluid Demand
Fluid Milk Sales
2005-2009
The University
of Georgia
5,000
College of
Agricultural &
Environmental
Sciences
4,800
Million Pounds
4,600
4,400
4,200
4,000
2005
2006
2007
2008
2009
3,800
Jan
Feb
M ar
Apr
M ay
Jun
Jul
Aug
Sep
Oct
Nov
Dec
What Were the Drivers of Milk Prices in 2009?
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Milk Production (Supply)
Dairy Cow Numbers
Milk Per Cow
Milk Consumption (Demand)
Fluid Demand
Commercial Disappearance
Cheese
Butter
Milk Powder
+3.6%
-2.0%
-13.0%
What Will Drive Milk Prices in 2010?
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
The Good News
A Weaker USD Will Improve Exports
Feed Costs Will Decline
171,000 Fewer Cows Will Decrease Production
The Bad News
Large Supply of Replacement Heifers
Recovering Production in NZ and Australia
EU Subsidies for Dairy Exports
Can’t Say For Sure
Temporary Increase in CCC Support Prices
Temporary Price Support Increases
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Original Aug/Sep/Oct
NDM
Cheese
(Blocks)
Cheese
(Barrels)
$0.80
$0.92
$1.13
$1.31
$1.10
$1.28
Butter
$1.05
$1.05
If The Markets Are Correct . . . .
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
If The Markets Are Correct . . . .
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Ja
n0
Ap 0
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Ja 0
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Ap 1
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r-0
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l-0
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t-0
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$/cwt
The Last Time Prices Were Near Support . . . .
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
Southeast Uniform Price
Class III Price
$0.00
n00
ay
-0
Se 0
p0
Ja 0
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College of
Agricultural &
Environmental
Sciences
Ja
$/CWT
Watch for Falling Prices
The University
of Georgia
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
So If The Markets Are Correct . . . .
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
We Should See Some Price Recovery
The University
of Georgia
$30.00
College of
Agricultural &
Environmental
Sciences
$25.00
$15.00
$10.00
$5.00
Southeast Uniform Price
Class III Price
$0.00
Ja
n00
Ju
l-0
0
Ja
n01
Ju
l-0
1
Ja
n02
Ju
l-0
2
Ja
n03
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l-0
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Ja
n04
Ju
l-0
4
Ja
n05
Ju
l-0
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Ja
n06
Ju
l-0
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Ja
n07
Ju
l-0
7
Ja
n08
Ju
l-0
8
Ja
n09
Ju
l-0
9
Ja
n10
Ju
l-1
0
$/CWT
$20.00
A Few Trends Worth Noting
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
 The Southeast Continues to
Loose Milk Production
 Production Increases in the Midwest and Northeast
 The West Has Lost Cows – But Not Necessarily
Milk Production
The University
of Georgia
College of
Agricultural &
Environmental
Sciences
Got Questions?