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Economist expects dairy prices to improve

 

An economist expects dairy prices will continue to strengthen this year.   David Bullock from AgriBank tells Brownfield strong domestic cheese and butter demand doesn’t appear to be slowing down.  “We’ll probably see some cases where we’ll see some run-ups, you know, and there’s some shortages in terms of inventory.  We’ll see some run-ups in the cheese price maybe approaching $2-dollars.  Butter you know is already above $2-dollars here per pound.”

Bullock says he believes cheese and butter will have a pretty good 2017 — making the Class-3 price better than last year.  “I think translating it back to class-3 price, on average, you know we’re probably looking at around 16-17 dollars I think is going to be, what I would be looking at for the average for 2017.

Bullock says weather could influence feed costs, productivity, and cow comfort.  He also says the strengthening dollar could hurt export sales where more than half of the powdered milk and whey products go.

Bullock says producers need to be good marketers, and the futures market is just one tool available.  “It’s always a good idea to basically work through the numbers for your operation.  Don’t just take a one-size-fits-all recommendation, but work through those numbers.  If you don’t know a lot about a particular marketing tool, you know there’s plenty of good education sources our there.  Learn about the various marketing tools that are available.”

Bullock also predicts the margin between feed costs and milk prices will stay above the $8-dollar level, making buy-up coverage under the Margin Protection Program useless for many producers