By DOUG SCHMITZ

Iowa Correspondent

WEST DES MOINES, Iowa — The U.S. average all-milk price increased from May to $17.30 per cwt. in June, which is the first significant monthly increase in milk prices since December 2016, according to a recent USDA report.

Released August 30, the report stated that June’s higher Class III and IV milk prices were the primary driver of the increase.

“Milk prices staged a nice rebound in July 2017, according to USDA, rising by 60 cents per cwt. from the prior month and to the highest level since February 2017,” said Dave Miller, Iowa Farm Bureau Federation director of research and commodity services.

He said according to most analysts, however, strength in milk prices to the extent seen last year isn’t likely. “Growth in sales of dairy products and higher stocks in coolers have tempered expectations for price strength this fall. It will likely take a rally in cheese prices to underpin sustained market price strength.

“Current expectations are that milk prices may add another 50 cents per cwt. in the current seasonal rally,” he added.

For 2017, the all-milk price forecast is $17.70-$17.90, a decrease from last month’s forecast of $17.80-$18, according to the August 20 Dairy Market Report, jointly released by the National Milk Producers Federation and Dairy Management, Inc.

The report said the 2018 all-milk price forecast is $17.55-$18.55 per cwt., a decrease from last month’s forecast of $18-$19. “This is consistent with Chicago Mercantile Exchange (CME) dairy futures settlement prices at the time the department’s August forecasts were reported, and would mean a $1.60 per cwt. increase in this year’s average milk price, compared with 2016,” the report noted.

In July, Iowa’s Mailbox Milk Price compared favorably to other Midwest states, Miller said.

“Wisconsin had the highest price in the Midwest at $17.75 per cwt.; Iowa was second with $17.51 per cwt., and Illinois third at $17.44,” he explained. “Michigan had the lowest milk price in the Midwest at $15.05.”

The August 20 Dairy Market Report stated the further easing of the milk production buildup of the past year or so has contributed to lower product stocks, and ultimately to stronger milk prices: “The U.S. dairy trade balance during the second quarter increased by the equivalent of a full percentage point of total domestic milkfat production.”

The Sept. 19 USDA Milk Production report said U.S. milk production in the 23 major states during August totaled 17 billion pounds, up 2.1 percent from August 2016. (July revised production, at 17.2 billion pounds, was up 2.1 percent from July 2016.)

The report said U.S. production per cow in the 23 states averaged 1,948 pounds for August, 26 pounds above August 2016, which is the highest production per cow for that month since the 23 State Series began in 2003. The report added the number of milk cows on U.S. farms in the 23 states was 8.73 million head, 66,000 more than August 2016 but unchanged from July 2017.

Greg Matli, state statistician of the USDA’s Indiana Field Office, said Indiana dairy herds produced 350 million pounds of milk during August, up 1.7 percent from a year ago. “The daily rate per cow was 60.3 pounds, unchanged from August 2016,” he said. “The dairy herd was estimated at 187,000 head for August, up 3,000 head from a year earlier.”

The report said Illinois dairy herds produced 156 million pounds, up 2.6 percent from August 2016, with per-cow yield of 1,675 pounds, up 60 from a year ago, and a herd of 93,000, down 1,000 from last year.

In addition, Iowa dairy herds produced 434 million pounds, up 2.8 percent from August 2016, with per-cow yield of 2,000 pounds, up 30 from a year ago, and a herd of 217,000 head, up 3,000 from last year.

“Dairymen across Iowa are hoping this rebound in prices is the start of some seasonal strength in milk prices such as seen in 2016, when prices rallied from $14.50 in May 2016 to $19.50 by November 2016,” Miller added.

Dairy herds in Michigan produced 948 million pounds, up 3 percent from August 2016, with per-cow yield of 2,220 pounds, up 40 from a year ago, and a herd of 427,000, up 5,000 from last year.

Ohio dairy herds produced 468 million pounds, up 2.4 percent from August 2016, with per-cow yield of 1,785 pounds, up 55 from a year ago, and a herd of 262,000, down 2,000 from last year.

Kentucky and Tennessee weren’t included in the 23-state report.

With lower expectations for exports and relatively high stock levels of dairy products, the Sept. 18 USDA Livestock, Dairy and Poultry Outlook report stated all-milk price forecasts have been lowered.

“Dairy exports have added strength to milk prices,” Miller said. “But after 12 straight months of year-over-year growth, dairy export volume declined in July. Exports of nonfat dry milk/skim milk powder declined 13 percent, the first decline since June 2016. Nonfat dry milk/skim milk powder exports are facing competition from the (European Union).”

He said both whey products and lactose exports were unchanged from a year ago.

“However, exports of butterfat and cheese were 66 percent and 14 percent higher, respectively,” he said. “On a total solids basis, exports were equivalent to 13.4 percent of U.S. milk production, compared to 14.5 percent last year, and the lowest since January.”