Milk production for 2011 is forecast to increase as producers respond to improving returns. Cow numbers are projected lower than 2010, but the rate of decline is expected to slow, especially in the latter part of the year. Milk per cow is forecast to increase at a rate similar to 2010. Commercial exports are forecast to increase as the global economy improves. Imports will also increase slightly. An improving economy will support increased domestic use, reducing stocks below 2010 levels. Cheese, nonfat dry milk (NDM), and whey prices are forecast higher in the face of improved demand and tighter supplies. However, butter prices are expected to be below 2010 levels. Nonetheless, both Class III and Class IV prices are forecast to be higher than 2010 as higher cheese and whey prices support the Class III price and stronger NDM prices more than offset weaker butter prices and support the Class IV price. The all milk price is forecast at $15.70 to $16.70 per cwt for 2011.

Forecast milk supply in 2010 is raised slightly from last month reflecting a slower decline in cow numbers and stronger expected growth in milk per cow. Cheese and whey price forecasts are lowered, resulting in a lower Class III price. Butter and NDM price forecasts are raised and the Class IV price increased. The all milk
price is forecast to average $15.65 to $16.15 per cwt.