October 18

10/18 - The U.S. milk cow herd has declined for 2 straight months, likely the result of higher feed prices. Milk yield per cow in Aug was down 1.3% from July and off 0.1% from a year ago. In last week’s WASDE, the USDA cut its 2021 milk production growth forecast from 2.1% to 1.7%, and left 2022 unchanged at +1.2%. USDA raised projected Class III milk prices from $16.65/cwt to $17.05 for 2021 and from $16.45 to $17.10/cwt for 2022. That compares to average prices of $16.94 in 2020 and $14.72 in 2019. After dropping below $16.00 in late August, Class III milk futures have rebounded to $17.94/cwt (10/15). USDA bumped its 2021 block cheese forecast from $1.64 to $1.68/lb and raised 2022 from $1.6550 to $1.7150. Both forecasts are well below last year’s $2.00 average. Block cheese at $1.78/lb (10/15) has trended steadily higher from lows of $1.48 in June.