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Strength seen in U.S. dairy market

Iowa's dairy herd down 1,000 cows

By Jean Caspers-Simmet

simmet@agrinews.com

NEW HAMPTON, Iowa -- The; dairy market has found a couple of reasons for milk price strength even though the latest production report from USDA put the May milk production increase at 4.4 percent, says Robert Tigner, Iowa State University farm management specialist.

The May increase came from increased cow numbers and milk per cow, Tigner said.

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The 23 dairy states' cow numbers were 54,000 higher in May than one year ago and have risen by 42,000 since February.

Only four of the 23 reporting states had milk production declines for May, Iowa was one, down 1.2 percent. Iowa's dairy herd dropped by 1,000 cows from April and was 9,000 fewer than May 2004.

Iowa's remaining dairy herd produced an additional 60 pounds each. If Iowa's herd size had remained the same as one year ago, the production decline would have been 0.5 percent.

Minnesota added 2.5 percent milk and Wisconsin milk rose 2.7 percent, Tigner said. Both states lost dairy cows, Minnesota cows were off by 5,000 and Wisconsin was down 9,000 from a year ago.

Even with strong May milk increases, large cheese and expanding butter inventories, cheese prices have returned to mid-May levels, Tigner said.

Cheese users are building inventories for later use, apparently not wanting to pay higher prices later in the year.

USDA project that the second half 2005 Class III prices will average $1-2 below year ago levels. But these projected prices are still 80 cents to $1.20 above the long-run average.

Cheese demand isn't the only factor supporting Class III prices. Strong whey prices will help keep Class III prices near $14 and above.

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