Will Fat Keep Milk Prices Afloat?
The dairy markets rely on strong exports to keep prices at profitable levels for farmers. What can become an issue is a strong dollar that makes it hard for U.S. dairy products to compete on the global market. Dr. Scott Brown from University of Missouri says dairy fat could support domestic and global demand going into 2018.
“So far demand has been really strong both in this country and around the world for dairy fat in particular,” he explains. “That may still be in the works as we look ahead in 2018.”
However, he doesn’t think there will be enough fat demand to boost milk prices.
“When we talk about a three billion pound increase in production this year, and another three plus billion pounds next year, just growing supplies,” he says. “That makes me worried about the price outlook.”
According to Brown, the latest milk production report from USDA showed a slight slowdown in milk production and that is good news for the supply side. But the potential for a major supply revision won’t be known until we head into 2018.