As a result of lower milk production and a reduction in cow numbers future dairy prices have been improving.
In September Milk production fell 0.7% from year ago levels the largest decline in 5 years, and milk cow numbers have dropped 208,000 head since the end of 2008.
Exports for dairy although still running about a third behind 2008 levels have shown an increase every month since July and domestic sales of fluid milk continues to be up with cheese and butter sales rallying over the past two months.
Limiting further gains is the fact that production per cow continues to increase
and cheese and butter stocks in storage are above year earlier levels.
Still, cheese prices are back around $1.50 and class 3 prices are in the upper $14.00 range for the first quarter of 2010 and average above $15.00 per hundredweight for the second and third quarters. Most economists do feel dairy prices are on their way back up but add how quickly the turnaround is will be determined by both the domestic and world wide economic recovery.