The Worst Might Be Over
Stronger exports and resilient domestic dairy sales suggest the bottom in milk prices may have already been reached in April, say University of Wisconsin dairy economists Bob Cropp and Mark Stephenson.
“Last month, I thought we would bottom out in May on milk prices, but I think we bottomed out in April,” says Cropp, pointing to a surge in block prices for cheddar cheese and butter jumping some 30¢/lb recently.
“If we can stay at 2% production growth, pretty good domestic sales and exports improving, I think we’ll do better than the low $17s by October. We’ll be looking at the high $17s by then, even $18,” he says.
“I have it just above $18 as well,” says Stephenson. “I’m kind of out there pushing it, but I think we’ll see some export sales that are going be significant enough to do that.”
The one thing that is concerning is the cow herd, up again some 69,000 head in April over a year ago and up 8,000 head over March. “Cow numbers have been going up every month since last October, and we’re 0.7% higher than a year ago,” says Cropp.
He notes that growth in Wisconsin has been slower than other states over the past decade. But you put whatever growth the state has had on top of the second largest milk producing state in the country, it still adds up to significant growth over time. Last year, Wisconsin dairy farmers pumped out more than 30 billion pounds of milk, up from 22 billion pounds in 2004. That 8 billion pounds of increased milk production means Wisconsin processors are now having to process some 22 million more pounds of milk each day than they did 13 years ago.
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