Even though both milk production and cow numbers are down, heavy inventories continue to limit the class 3 market. In the USDA'S August Cold Storage report
cheese inventories were down just 6.8 million pounds, the smallest August decline since 1992 and butter stocks actually increased by 391,000 pounds, the first time that has happened since 1990.
The USDA is still forecasting a class 3 price range of $13.75-$14.75 for the 09/10 marketing year. However ,several private forecasters including dairy economist Bob Cropp feel the price will be higher, with expectations of $15.00 milk coming late in the first quarter of 2010.