Global Information would like to present a market research report, "Five year Forecast and Analysis on the United States Dairy Market" by Doane Advisory Service.
Slow growth in domestic demand and much smaller exports this year, have been a reason for the low prices this year, but prices are trending higher. However, with feed prices at relatively high levels historically, milk prices will need to continue to rally to get to profitable levels.
Milk production is projected to be 188.9 billion pounds in 2009, down 0.6 percent from 2008. This will be the first annual decline in milk production since 1996. The Doane milk production estimate for 2010 is for a decline of 0.8 percent.
Dairy cow numbers as of September are down 208,000 head from the end of 2008. The average number of dairy cows this year is projected to be 9.192 million head, down 1.3 percent from 2008. Cow numbers are expected to be down 2.5 percent in 2010. Poor profitability has sent many producers out of business.
Dairy profitability has improved from historically low levels. The milk-to-feed ratio jumped above 2 in October for the first time since November 2008. The income over feed costs to produce 100 pounds of milk improved to $7.04, also the highest level of the year. However, those levels are still poor historically.