News

Dairy market remains in flux

A dairy economist says the market remains in flux.

Phil Plourd of Blimling and Associates of Madison, Wisconsin, tells Brownfield volatile milk prices have been driven by a number of factors—including the price of corn.

“I think the big untold or underappreciated story (has been) how to cope in a world where corn is $4 dollars and less, rather than $4 to $8 dollars.  And I think we’re in the midst of a massive shift.  Five years ago when milk prices were really high, oh by-the-way corn was $7 dollars.”

He says the correlation between milk and corn prices is something that many analysts are still trying to understand.

“By the numbers; and I’m not saying that’s every farm in every location; but by the numbers, dairy farmers are making money in the current environment.  Even if it doesn’t feel like it (with) milk prices $5 to $7 dollars lower than they were at the peak.  We’re making as much money today, on paper, as we were back then.”

Plourd has concerns about possible trade disruptions, specifically between the U.S. and Mexico, impacting the dairy sector.

While cheese and butter markets remain mostly steady, he says milk powder has encountered some serious headwinds in recent weeks.

Brownfield interviewed Plourd at the Carver County Dairy Expo in Norwood Young America Monday.