Hope for Better Milk Prices
The dairy market ended 2016 with a surplus of optimism. Many market analysts were flaunting $17 and $18 milk. Today, farmers are starting to question those price forecasts, especially after what happened to producers in Wisconsin and Minnesota earlier this month.
“The uncertainty of [the Grassland situation] only ads to some of the market decay we’ve seen in prices over the last month and a half,” says Mike North of Commodity Risk Management. “Many people have lost confidence in the talk of $17 and $18 milk that preceded the year.”
Market analyst Bryan Doherty of Stewart Peterson says there is concern the market will move even lower in price as Spring Flush arrives.
“I’m a little worried about one more leg lower because of Spring Flush,” he says, adding that it’s common during this time of year to see product buyers take a different approach to buying as demand wanes.
As is usually the case with the seasonality of the dairy market, both analysts agree there’s some hope for improved prices as we move out of Spring Flush and into the fall.
“There is some hope for the second half of the year when we get through the Spring Flush and once milk buy-ins move through the system,” North says. According to Doherty, prices could improve as buyers start buying for the school season and into Christmas.
North isn’t so sure prices will improve but says if nothing else the second half of 2017 offers hope for producers.
“Many are clinging to the seasonality of the market,” he says, “but most are brought to question their earlier optimism and are just clinging to hope in the second half.”
As the market heads into Spring Flush Doherty cautions farmers that prices could move lower before they move higher.
“We’ve got better days ahead but, unfortunately, we’re still stuck in this downturn right now that hasn’t shown a clear sign that it has bottomed,” he says.