Is Dairy Market Poised for ‘Bull Run?’
If history is any guide, dairy markets may be poised for more good news this fall and into 2020, says Mark Linzmeier, a dairy analyst and owner of MarginSmart Dairy Analyzer.
He, like other analysts, points to market conditions that are all poised to drive markets higher:
• Flat milk production over the past year.
• Lower cow numbers and replacement numbers held in check.
• African swine fever in Southeast Asia, which will create demand for both dairy animal protein as swine herds rebuild and for dairy products to replace pork until it does.
• Poor 2019 growing and harvest conditions in major dairy producing regions, notably the Midwest, which will impact feed quality for the next five quarters.
All of these conditions could drive markets higher. “Note in the last three bull runs, $8/cwt run up occurred in four to nine months,” he says.
While there has been a $4/cwt profitability increase between February 2019 and this past September, he believes the market could climb a few more dollars this fall and winter.
His advice: “I strongly suggest you protect some downside, but keep your topside open on milk. Many of my customers have protected various percentages of production of their bottom side with Dairy Revenue Protection insurance or other strategies.”
But he also warns there is enough uncertain in the market that anything could happen. “The export markets for all proteins are a much greater ‘wild card’ than back in 2013, and we have a Presidential election year coming up in 2020.”
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