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Optimistic dairy markets

An ag economist says the dairy market outlook is starting to brighten.

Peter Vitaliano with National Milk Producers Federation tells Brownfield the relatively modest increase in U.S. domestic milk production has been helpful to dairy farmers’ prices.  “The domestic market and what we have of export markets—we can absorb without over producing and without hurting prices—we can absorb about one percent more production a year, two or three percent—forget it.”

He says March milk production inched up to almost two percent which is when the markets started to look ugly, but if production remains in the one percent range through 2016, its good news for farmers.  “The growth we have had is all basically production per cow and that kind of gets built in.”  Vitaliano says the dairy herd hasn’t grown much, but when farmers replace cull cows with newer cows, productivity automatically goes up about one percent.

He says world markets are strengthen for the non-fat dry milk and dry whey price. On the domestic market, he says cheese and butter prices are also strengthening.  “Is it going to be enough to make it profitable for dairy farmers, it’s hard to say, but it’s relative.”  He says, “It was looking pretty bleak a couple months ago, it’s looking better now on the milk price side.”

Vitaliano says until the world markets recover and skim milk powder and dry whey prices see more improvement, cheese and butter will continue to carry the milk price.

AUDIO: Interview with Peter Vitaliano