Dairy Markets Offer Something For Which to Be Thankful
Even though U.S. milk production surged 2.5% in October, shrinking production in other regions of the world and increasing global demand mean prices likely will improve significantly in 2017, say University of Wisconsin dairy economists Bob Crop and Mark Stephenson.
“If you look at the U.S., these kind of numbers would be leading to softness not firmness,” says Mark Stephenson. They note that 20 of the 23 major dairy states reported increased production in October. Even California, which had declining production for the previous 22 months, saw a 1.8% surge in output in October.
“But milk production is down in all major exporting countries,” says Cropp. And seven of the last eight Global Dairy Trade auctions saw world prices increase, indicating an improvement in demand, he adds.
The United States Department of Agriculture is projecting about $1/cwt increase in the All-Milk Price in 2017. Cropp and Stephenson are even more optimistic, saying they’re projecting a $2 bump in prices over this year.
“The average Class III for the year could be near $16.50, a good improvement over the expected $14.75 this year,” says Cropp. A 16.50 Class III would suggest an All-Milk Price average of $18 or more.
“But, final milk prices will be subject to any rather small changes in milk production, sales, or exports,” says Cropp.
Click here for the full analysis by Cropp and Stephenson.