Milk Prices Could Peak in August
Milk prices have been increasing gradually since their summer slump a few months ago. Could they move higher? Mike North of Commodity Risk Management says given the demand surges that typically occur in August, prices could move higher in the near term. But, they might not stay there though.
“If you look at 2018 values they haven’t changed,” North says. “That is the market saying you can do what you want on the front end but we’re still looking at big inventories on the back end and we’re not going to run values very high.”
Inventories of cheese, butter and milk powders are at record highs and dairymen continue to produce record volumes of milk. For that reason the market has settled on average milk prices of $16.60 per CWT for the first half of 2018. Currently, the last part of 2017 is looking at an average price of $16.80 per CWT but North says given the market was at $17.30 per CWT just a couple of weeks ago, 2017 prices could move higher yet.
“I see us maybe trading back to that $17.25- $17.50 range,” he says. “When we get there, that becomes an opportunity for dairymen and one that should be addressed.”
According to North, breaching the $17.50 level will be extremely difficult given the high inventories of dairy products on hand.