Expectations of higher milk per cow during 2010 have resulted in USDA pushing up expected milk production this year and lowering milk price forecasts slightly. The agency still expects cow numbers to average below 9 million cows for the year. (The December national herd estimate was 9.08 million cows.) However, some analysts doubt that cow numbers will be as low as the USDA predicts.

The USDA expects the higher milk per cow (+1.9 percent) to come about for two reasons. First, feed prices will be lower, encouraging more grain and protein supplement feeding. Corn price projections are in the range of $3.40 to $3.85 a bushel ($121 and $138 a ton) and soybean meal between $265 and $315 a ton. With rising milk prices, the Milk-Feed Price Ratio will improve but not as high as 2.5 which is the level that generally encourages milk production growth because of heavier feeding and less culling.

Another factor affecting milk per cow is the amount of culling that took place during 2009. Between normal culling and CWT cow retirements, dairy cow slaughter last year was up 224,000 head or 8.7 percent from 2008. The nation's dairy herd is younger and healthier as a result of the culling and should be more productive on a per-cow basis.

In its most recent outlook report, UDSA projects 2010 milk production to be about 188.4 billion pounds. That would be 0.4 percent below the estimated 2009 milk production of 189.2 billion pounds.

USDA forecasts that the Class III price in 2010 will average about $15.15 (between $14.75 and $15.55). That estimate is between 30 and 40 cents lower than earlier forecasts. The average Class III price in 2009 was $11.36 per hundredweight.

USDA forecasts the All-Milk Price for 2010 to be around $16.60 (between $16.20 and $17). The All-Milk Price averaged $12.79 in 2009.