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Lower milk production and dairy stocks haven’t added up

Dairy economists say the futures market and USDA forecasts are too pessimistic about milk prices.

University of Wisconsin’s Mark Stephenson says dairy stocks are drawing down and milk production has been flat which eventually should be lead to stronger prices.

“When is it that we really see prices rebound? Frankly, I think that the futures market in the last month or so have kind of been fluttering, they haven’t decided what they want to do.”  

Both he and analyst Bob Cropp say financial stress continues in the dairy industry, dairy farmers continue to exit the business, cow slaughter levels remain high, and dairy replacement numbers are the lowest in a decade which all point to flat to lower milk production.

“We really need some more reports, I’m anxious for the next cold storage report and in fact dairy products report.”

Stephenson says those stock numbers will give greater insight into how tight milk supplies are and the potential for price movement.