Milk Update: Upside Risks To Average Price of US$13.50/cwt In 2010

Core View: In this class III milk update, we note upside risks to our core view for an average price of US$13.50/cwt in 2010 and US$15.50/cwt in 2011, which we set out in October (see 'Commodities Forecast: Class III Milk To Average US$13.50/cwt In 2010', October 1 2009). Milk prices have steadily trended higher from February's cyclical bottom and we expect that they will remain well supported in coming months. We expect the ongoing supply response from global producers should further rebalance the global market and underpin prices over the medium term.

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