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FAPRI Expects US Dairy Herd Contraction For Next Few Years As Supply Growth Slows

Dairy Cow Inventory Grew For 4th Straight Year In 2017; Cow Numbers Haven’t Grown For 5 Straight Years Since Early 1940s

Contraction of the US dairy herd should prevail for the next few years as milk supply growth slows to match current demand trends, according to the annual “US Baseline Briefing Book,” released late last week by the Food and Agricultural Policy Research Institute (FAPRI).

Dairy cow inventory grew for the fourth consecutive year in 2017, the report noted. Though a four-year expansion of the dairy herd also took place from 2005 through 2008, cow numbers have not grown for five straight years since the early 1940s.

After averaging 9.392 million head last year, the US dairy herd is projected to decline every year through 2022, when it reaches 9.27 million head. It’s then expected to grow every year through 2027 (the end of the projection period), when it reaches 9.347 million head.

Most of the increase in the national herd last year was due to increases in Texas and New Mexico, as inventory declined in a majority of the 50 states. Milk cow numbers are projected to continue increasing in those states over the projection period, from 511,000 cows to 605,000 cows in Texas and from 329,000 cows to 339,000 cows in New Mexico.

Of the other eight states broken out by FAPRI, cow numbers are projected to decline over the projection period in six — California, Wisconsin, New York, Pennsylvania, Minnesota and Ohio — and increase in two — Idaho and Michigan.
Milk production per cow is projected to increase from 22,937 pounds in 2017 to 25,899 pounds by 2027, pushing US milk production up from 215.4 billion pounds in 2017 to 242.1 billion pounds in 2027.

The Baseline Briefing Book is prepared annually by economists with FAPRI and Agricultural Markets and Policy (AMAP). The report gives policy makers, famrers, agribusinesses and the public an overview of the state of the US farm economy, according to Patrick Westhoff, FAPRI’s director. Projections in the report are based on market data available in January.

There were large beginning stocks of cheese in 2018, the report said. While nonfat dry milk stocks are lower than in the early 2000s, they have grown to the highest level since mid-2009.

Unless market demand for growing supplies of nonfat dry milk accelerates, both in the US and globally, milk prices will be held back even as butter demand remains historically strong, according to FAPRI. The all milk price for 2018 is projected at $16.29 per hundredweight, its lowest level since 2009, and a decline in the dairy herd will likely be necessary to allow prices to recover.

Per capita cheese consumption is projected to rise from an estimated 36.6 pounds in 2017 to 38.8 pounds by 2027. Per capita consumption of American-type cheese is projected to grow from an estimated 14.6 pounds in 2017 to 15.4 pounds in 2027, while per capita consumption of other cheeses is projected to rise from 22 pounds in 2017 to 23.4 pounds in 2027.

Among other dairy products, per capita consumption of butter is projected to increase from 5.7 pounds in 2017 to 6.2 pounds in 2027, while per capita fluid milk consumption is projected to fall from 167.5 pounds in 2017 to 155.1 pounds in 2027.

US cheese exports are projected to increase from 754 million pounds in


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