U.S. Dairy Outlook
BY BLAIR SMITH
PSU Dept, of Ag Economics
This year promises to have a
fairly large surplus of milkfat
but the smallest surplus of skim
solids since the early seventies.
During January-March, Govern
ment purchases of butter totaled
195 million pounds, up more than
a fourth from last year. Mean
while, no nonfat dry milk was
bought and cheese removals were
almost negligible. Although
cheese will be purchased during
April-June, 1989 purchases will
be very heavily butter. If the Com
modity Credit Coiporation (CCC)
buys any nonfat dry milk, quanti
ties likely will be very small.
Growing milk production will
provide large supplies of both
cream and skim milk. Strong
growth in commercial use of
cheese will absorb much of the
increase in the milk supply. The
largest changes from recent years
are related to sales of butter and
nonfat dry milk. Early 1989 com
mercial use of butter fell from
1988’s weak level, even though
sales of other cream-based pro
ducts had recovered. Weakness in
butter sates prevented the increase
in commercial use of milkfat from
matching the increase in produc
tion. Market conditions for nonfat
dry milk were dramatically diffe
rent. Increased commercial
exports and strong domestic use
easily absorbed any available sup
plies and caused milk to be shifted
into butter-nonfat dry milk pro
duction. Markets for nonfat dry
milk and similar products probab
ly will be tight throughout 1989.
January-March milk production
grew 2 percent from a year earlier,
despite sharply higher feed costs.
High-quality forage has helped
sustain growth in output per cow,
even though concentrate feediitg
was little changed from a year ear
lier. Cow numbers have slipped
only slowly, as expansion by some
products has, largely offset heavier
cow slaughter by others. These
patterns may persist during the
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rest of 1989, with annual produc- Dairy Bowl 4-H Winners Named
tion rising about 2 percent from
1988’s 145.5 billion pounds. !
Farm milk prices and wholesale ‘ -
prices of most dairy products jmbMk > ■ Hf*
dropped from the high seasonal
remained above the January- K fl
March support levels. On April 1,
the support purchase price for :
nonfat dry milk and cheese were "
increase of SO cents per cwt in the
support price milk as
flush season. Although seasonal
increases during the second half of
1989 are not likely to match those |fr r '
of the previous year, 1989 farm Bk<
milk prices probably will average B iF/
10-30 cents higher than 1988’s B%J( x
$12.21 per cwt. Kp^
Early 1989 retail dairy prices
rose about as much from a year
ago as did rthe indices of prices of
all food or of all consumer items.
Retail dairy prices may ease in
coming months, but the 1989
average increase probably will be
3-5 percent.
Larger milk production has
swollen supplies for manufactur
ing in early 1989. Strong nonfat
dry milk prices pulled most of the
added supply into butter-nonfat
dry milk production. The remain
der of the extra supplies basically
went into cheese varieties other
than American in order to meet
growing use. During the rest of
1989, nonfat dry milk and cheese
probably will compete actively for
milk supplies.
Commercial use (milk equiva
lent. fat basis) was up slighdy in
early 1989, mostly becuase of
brisk cheese sales. A 2-percent
gam m of milk
and dairy products is expected for
this year, partially in response to
continued economic growth. Sales
in 1988 reached 137.2 billion
pounds, up 1 percent from 1987.
On March 1, commercial stocks
of dairy products stood at 5.0 bil-
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->udrow (center) of Clover Hill was honored as an Extension Pioneer dur
ing statewide 75th anniversary celebration of the Cooperative Extension Service,
held May 111 n Greenbelt. This picture depicts Dudrow in a familiar situation-posing
with a state champion 4-H dairy cattle Judging team from Frederick County which he
coached. He’s shown here with the 1988 state champion senior 4-H team. Team
members are (left to right): Stacey Guyton, 17, of Amoldstown; Teresa Summers, 20,
of Country Club Heights; Andrea Raber, 18, of Woodsboro, and Jack Kahler, 19, of
Johnsvllle. Dudrow also was senior coach and Andrea Raber, a member of Frederick
County’s 1989 State champion senior 4-H dairy bowl team.
lion pounds, milk equivalent,
similar to a year earlier. While
stocks of most products were lar
ger, commercial inventories of
American cheese remained low.
CCC held sizable stocks of butter
but almost no cheese or nonfat dry
milk.
Efforts by the European Com
munity and the United States to
reduce milk surpluses and accu
mulated stocks dramatically tight
ened international markets for
nonfat dry milk and other dairy
products. International prices of
nonfat dry milk probably will
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remain strong during 1989
because import demand shows no
sign of weakening. The high
prices have lowered U.S. imports
of products using skim solids and
created an export market. Condi-
Rooth Receives National Jersey Award
REYNOLDSBURG, OH
Clifton (Jay) and Laura Booth,
have been awarded The American
Jersey Cattle Club’s 1989 Young
Jersey Dairyman Award. The
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Lancaster Farming, Saturday, May 27,1989-A37
lions also have tightened substan
tially in international butler mark
ets. However, butler price pros
pects are not as bright as for
nonfat dry milk because import
demand probably will soften.
Booths are among seven winners
from across the United States who
have excelled in dairy fanning and
Jersey cattle breeding. They have
been very active in AJCC prog
rams and Jersey functions. The
winners will be honored at an
awards breakfast June 17 at the
AJCC-NAJ Annual Meeting in
Cedar Rapids, lowa.
Jay Booth and his wife Laura
own quite a large herd of Jerseys
which they register under the pre
fix Sweet Grass Jerseys. They
have a total of 189 cows and 181
heifers. Cuncntly milking are 173
head with a rolling herd average of
13,738 lbs. milk, 655 lbs. fat and
530 lbs. protein. Jay has been a
great supporter of Equity and is a
benefactor of Multiple Compo
nent Pricing in the Great Basin
FMMO.
Milk Market
(Continued from Page A 36)
ali/alion” may provide an oppor
tunity to develop foreign markets
particularly in the middle and far
cast countries. The price for these
new markets may be the loss of
dairy import quotas but it’s hard to
estimate the bottom line effect of
such a tradeoff. Perhaps we’ll find
a market for our surplus butter.
The decision may be made on
what is “the greatest good for the
greatest number” of fanners but
even in that group dairymen are a
definite minority. Hopefully your
interests will be well represented
but you should closely follow the
developments of these GATT
negotiations because the decisions
will have a very long term effect
on your business.
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