markets slowly grind lower
April 2, 2016

Milk Market Continues Slow Grind Lower

 |  By: Anna-Lisa Laca

This week was rather slow in the dairy market. Milk prices have stayed the same and aside from some price recovery in the futures markets. Robin Schmahl, of AgDairy, says there isn’t much optimism to discuss.

Margin Protection Program-Dairy (MPP)

Schmahl says there’s a good chance MPP might not pay out this year. “Last year there was a lot of discouragement with that program so this year not many people took higher elections,” he says.

In February the calculation for income over feed was $7.91. According to Schmahl, that number has to be averaged with the January price of $8.11. So the two-month price is $8.01. “Even with low milk prices, we haven’t triggered a payment with the MPP program,” he says.  “We shouldn’t want to get paid because that means we aren’t being profitable.”

Schmahl admits that is disappointing for people who purchased $8 coverage.

Milk Supply Steady

Milk production is experiencing its annual seasonal increase. “Some areas of the country are in spring flush,” he says. “Others, like the Midwest, are just entering spring flush.”

There is so much milk in the pipeline Schmahl says co-ops are discussing implementing base plans. “I think one is going to do that,” he says.

According to Schmahl, the strong milk production is going to keep a lid on prices.

Notable Market Highlights

Blocks down $0.02

Barrels up $0.005

Butter up $0.0375

NFDM down $0.075