The U.S. beef cattle herd is getting smaller while according to the USDA report, the dairy herd is 1% bigger than a year ago. According to USDA livestock analyst Shayle Shagam producers are holding about 3% more heifers for entering the milk cow herd.
"There is a momentum that is built in," Shagam says. "Producers who have wanted to expand have been trying to get hold of animals. What we're basically seeing here is the follow-through on that pent-up demand for dairy animals."
Milk production is expected to increase 2% while milk prices will likely fall about 4%, which may change the situation for some producers.
"Producers who are in a weaker financial position may exit the industry," Shagam says. "Producers who had planned expansions during the year may slow down, but in general these numbers would point to continued growth in the dairy herd."