Just in time for summer, dairy producers are slowly starting to reap the benefits of good domestic sales and stronger exports.
That’s the assessment of Dr. Bob Cropp with the University of Wisconsin-Extension. In his monthly Dairy Situation and Outlook report, the professor emeritus said May is already experiencing increases in dairy product prices after exports set a record high in March on a total volume basis surpassing the previous record set in early 2014.
“If these dairy product prices can hold, average May prices compared to April on the CME could average about 4 cents per pound higher for butter, about 14 cents for cheddar barrels, four cents for 40-pound cheddar blocks, eight cents for nonfat dry milk, and three cents dry whey,” Cropp noted. “As a result the May Class III price would be near $15.25 compared to $14.47 in April the low of $13.40 back in February. The May Class IV price would be near $14.45 compared to $13.48 in April and the low of $12.87 back in February.”
His summary further stated that the price of butter, cheese, nonfat dry milk and dry whey remain lower than and competitive with world market prices. But milk prices are expected to strengthen and possibly top out in October or November.
“The degree of strength will continue to depend upon the level of milk production and dairy exports,” he said. “The summer weather, quality of forages harvested and the condition of the corn and soybean crop that will impact feed costs will have a bearing on milk production this summer, fall and into winter.”
Meanwhile, the USDA’s recent April milk production report also shed some positive news for milk prices. Compared to April 2017, milk production was just 0.6-percent higher and milk cow numbers declined by 2,000 head from the month earlier. Cropp has been saying for months that milk production will need to slow down if prices are going to catch its footing again.
All told, the retired professor says the Class III milk price could reach near $16 by June and reach even higher in July and beyond. Cropp further expects dairy margins to improve, but that depends on what feed prices do over the remainder of the year.
Source: Wisconsin Ag Connection