January 12/Dallas/Dairy Herd Network  -- Rising whey prices are part of the reason why the U.S. Department of Agriculture has boosted its estimate of Class III milk prices for the coming year. According to the “World Agricultural Supply and Demand Estimates” report, Class III prices are expected to average between $17.10 and $17.90 this year, which is a slight upward revision from December’s estimate of $16.90 to $17.70.

Bob Cropp, professor emeritus and dairy markets analyst from the University of Wisconsin, has predicted that Class III prices could average $17 this year, although there is a possibility they could do a little better than that.

In its report, USDA also raised its estimates of the all-milk price for 2012. The all-milk price is now expected to average between $18.30 and $19.10 for the year, compared to last month’s estimate of $18.10 to $18.90.

Dry whey futures prices continue to rise, as they did all of last year. Both the February and March dry whey futures have passed the 70-cent mark. Whey has experienced a renaissance in recent years as more food companies, including sports-drink manufacturers, utilize whey protein.

Meanwhile, Greg Scheer, dairy analyst for Doane Advisory Services in St. Louis, offers these comments on the latest WASDE report. “USDA’s Supply/Demand report was relatively neutral for the milk market," he said. "Estimated 2011 production was trimmed slightly, but the 2012 production estimate was left unchanged. USDA is forecasting a 1.3% increase in milk production in 2012 versus the 1.7% increase year-over-year in 2011. A slight reduction in forecast cheese prices for 2012 was more than offset by projections for higher non-fat dry milk and whey prices. The midpoint all-milk price estimate was raised to $18.70 per cwt compared to the December estimate of $18.50 per cwt."

 From the January 13, 2012, Prepared Foods' Daily News.