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Milk production 



Milk production was close to its level the previous year during most of the first half of 

 1992, but then jumped 4 percent over a year earlier mid-year. The rate of production 

 increase moderated to about 3 percent over the previous year by year-end. During 

 1992, milk production totalled 152.0 billion pounds in the U.S., up 2.4 percent from 

 1991. For 1993, the outlook calls for a moderation in the rate of increase in milk 

 production, to a rate of increase between 1 to 2 percent over the previous year. For all 

 of 1993, milk production could total 154.6 billion pounds in the U.S., which would be 

 an increase of 1.7 percent over 1992's total. 



Milk Prices 



Due to a projected moderate buildup in milk production this year, milk prices can be 

 expected to be lower this coming year than they were in 1992, at least during the first 

 part of the year. This outlook will be influenced by the rate of increase in commercial 

 use of milk and dairy products as well as the level of expected exports this year under 

 the Dairy Export Incentive Program (DEIP). During calendar year 1992, USDA 

 accepted bids to export dairy products with a total milk equivalent of 2.65 billion 

 pounds under the DEIP, for delivery up through June, 1993. NMPF calculations show 

 that these exports had the impact of increasing average prices received by all U.S. milk 

 producers by more than $.50 per cwt. during calendar year 1992 and will increase all- 

 milk prices by an additional significant amount during the first half of calendar year 

 1993. 



In November, 1992, USDA projected total net removals under the dairy price support 

 program during calendar year 1993 at 4.6 billion pounds, milk equivalent of total 

 solids. This figure, which is a projection of CCC purchases and DEIP sales combined, 

 is based upon the following projections of net removals for individual dairy products: 



Butter: 300 million pounds, 



Nonfat dry milk: 205 million pounds, 



Cheese: 60 million pounds. 



The following price outlook assumes no major changes in last year's pattern of growth 

 in commercial use and DEIP exports. 



M-W price : The Minnesota- Wisconsin price (at 3.5 percent milkfat) should bottom out 

 at between $10.30 and $10.40 per cwt. during March, 1993, and begin increasing 

 thereafter. The M-W could peak well above $12.00 per cwt. during October or 



