News

Exports make dairy price forecast good

Recent USDA reports have mixed news for dairy producers.  Economist Mark Stephenson says,  “We were up about two-and-a-half percent in milk production again, and we had a cold storage report that showed that we had some build up of cheese stocks and, you know, butter stocks that were a little bit bigger than we might have expected so those things are certainly putting some downward pressure on it.”

Stephenson directs the Center for Dairy Profitability at the University of Wisconsin-Madison.  He tells Brownfield the long-term outlook is better because of export markets.  “All of the major exporters of the world, meaning Oceana and the European Union, and countries in South America are all well down in milk production and we’re working down world stocks, and since we play in a world market, that’s going to be the bigger long-term story.”

He says some producers are concerned about reopening trade agreements and getting a worse deal.  “I don’t think it’s going to be negative for us so I’m still thinking that we have a pretty good size role to play, but if we don’t, if we start to get shut out of those markets, then we’ve got way too much dairy product to be consuming domestically.”

Stephenson forecasts Class III milk prices will level off and Class IV will hit the 15 dollar mark within three months because of butter and nonfat dry milk demand.

Stephenson expects the best milk prices in the 4^th quarter of this year.