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Cropp Still Expecting Milk Prices to Rise in '17
Wisconsin Ag Connection - 10/24/2016

A surplus of milk on the market continues to keep dairy prices suppressed this year, but Dr. Bob Cropp maintains that next year will be better. The professor emeritus from the University of Wisconsin-Extension says he thinks the worst is over in 2016; and that USDA and other price forecasters expect milk prices to improve throughout 2017.

"But there are differences as to how quickly and how much of an improvement," Cropp said in his monthly Dairy Situation and Outlook Report. "The level of milk production and exports will be key factors. USDA forecasts milk production to increase 2.2 percent in 2017 from 0.5 percent more cows and 1.7 percent more milk per cow. This is a lot of milk and will dampen the price increase. But, milk production could well be lower."

Milk per cow is expected to average 1.6 percent higher this year which is more than the recent average annual increases. So another increase for 2017 appears to be on the higher side, Cropp says.

Meanwhile, some positive factors point to improved dairy exports going forward.

"World milk supply and demand is slowly coming balance," he said. "Milk production in the EU was increasing about five percent early in the year and has dropped below year ago levels starting in June."

And the combination of low milk prices and weather issues has forecasts for lower milk production in New Zealand, Australia and Argentina. On the demand side it appears China will be more active in importing dairy products.


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