A massive herd, large domestic supply, falling domestic demand, and a strong dollar all show that prices may slip before they improve. Mike North of Commodity Risk Management says there is a growing supply of product across the board as we enter the time of year when dairy consumption typically drops. North adds, “We’re continuing to make product that’s adding to an already large supply, so there’s a massive collision of increased supply and declining demand.” Scott Brown of the University of Missouri says it is not just domestic oversupply that is causing challenges, but global milk supplies are continuing to increase as well.
The National Milk Producers Federation and the International Dairy Foods Association are looking for creative ways to help stimulate domestic demand for dairy in an attempt to eat through some of the excess supply. “One of the things we’re looking at,” says Michael Dykes of the IDFA, “is can we do something with the Supplemental Nutrition Assistance Program to incentivize dairy consumption.”