Dairy producers can expect a better all-milk price in the months ahead as strong domestic and international demand continues to push U.S. dairy product prices higher. At least that’s what USDA’s Livestock, Dairy and Poultry Outlook predicts for March.

Forecasts for cheese, butter and non-fat dry milk prices were all raised sharply in March. Whey price predictions were also up. For an all-milk price, USDA is suggesting $21.40-22/cwt, an increase from the February forecast.

A variety of factors continue to indicate that a dairy industry expansion is in the offing for 2014. Along with the stronger milk price, lower prices for corn and alfalfa should provide incentives to increase production.

In addition, prices for replacement heifers and dairy calves are higher than they were last year at this time. Most market observers also believe milk output per cow – unchanged in March at 22,500 lbs/cow – is likely to pick up in this year’s second quarter with a return to more normal forage quality.