Dairy Economists Still Bullish on Second Half Milk Prices
Though dairy markets have been lackluster this month, Wisconsin dairy economists Bob Cropp and Mark Stephenson are still bullish for prices to improve this summer and fall.
Cropp is projecting Class III prices will reach $17 in June, and then climb into the high $17s in the fourth quarter. “$18 is not out of the realm of possibility,” he says.
Stephenson is even more optimistic. “We’ll be over $18 by the fall,” he says.
The reasons are multiple. First, milk production remains flat. Cow numbers are down one percent from a year ago, and milk per cow is up just 1.1%. Second, the lifting of Mexico’s tariffs on U.S. cheese should help sales there, though the rebound won’t be immediate. Third, a late spring may impact feed quality and prices. Fourth, some dairy farms are finding it difficult to get financing this spring. And fifth, producers are continuing to go of business at a higher than normal rate.
While these latter factors are disappointing, it suggests dairy markets will tighten in the second half of 2019 and prices should respond to these tighter inventories.
Markets have already improved to the point that Dairy Margin Coverage insurance payments might not be triggered as early as June at the $9.50 milk/feed margin level. Earlier in the year, futures markets projected DMC payments through September.
To hear the entire Cropp/Stephenson podcast, click here.