dairy cows eating
March 22, 2016

Milk Prices Aren't Low Enough to Slow Production

Top Story  |   |  By: Anna-Lisa Laca

Last week was relatively uneventful for the dairy market. Traders didn’t see much change on the cash markets, but there was more fluctuation on the futures side, according Robin Schmahl of AgDairy. The key takeaway of the week: There’s not enough price pressure to either slow down production or decrease the size of the national herd.

“It seemed like traders came in and started buying whatever they could,” Schmahl says. “The Global Dairy Trade auction (which was down this month) had an impact on that. There’s a discrepancy between U.S. prices and world prices.”

On Friday, USDA released the February milk production report. Schmahl says that even after the leap day  (Feb. 29) adjustments were made, milk production was up nearly 1% on a daily basis. Milk production per cow was also up 16 lbs. Not only was production up, but cow numbers were as well.  

“Even though we’ve seen some heavier culling, we’re seeing cows go back in,” Schmahl says. “Low price hasn’t caused a big impact as far as condensing cow numbers.”

Is it possible that the current price of milk doesn’t hurt enough to slow down production or curb milk supply? 

Notable market movements:

Blocks down $0.01.

Barrels up $0.03.

Butter down $0.0375.

NFDM down $0.04.