Milk swirl.
January 29, 2018

December Milk Production Report ‘Glass Half Full’

 |  By: Jim Dickrell

With milk production up just 1.1% in December, it’s one of those “glass half full” reports that could have been even worse.

Milk production had been increasing close to 2% for several mid-months last year, so December’s increase of just of 1.1% was actually welcome news, say Wisconsin dairy economists Bob Cropp and Mark Stephenson in their monthly podcast this week. “If you take the five top [dairy] states, which produce half of the milk, production was hardly up,” says Cropp.

California was again down, and is producing some six million lb of milk less per day than it was just a few years ago. “So it was no surprise that California Dairies, Inc., is closing a plant,” says Stephenson.

Cow numbers were up 3,000 head in December, but that’s just a 0.5% increase and cow culling is on the rise as well.  “So I don’t see great strength in the cow herd this year,” Cropp says.

Even so, markets continue to be soft, and 2018 is shaping up to be year similar to 2016, where markets bottomed in spring and then slowly climbed through the fall. Cropp is projecting Class III prices in the $13s for the first quarter, rising to the $14s in the second quarter, and maybe reaching the high $15s by the fourth quarter. The average is bleak—maybe $1 or even $2 lower than 2017.

Cropp believes the low prices will keep a lid on cow numbers and milk production. Exports could also pick up in the second half of year. But if neither comes true, 2018 could be a very rough year. The first half of year, in particular,  won’t be easy for dairy farmers, say both economists.