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Analyst says “perfect storm” brought peak milk & cheese prices in November

A market analyst and broker says the fourth-quarter strength in the dairy market was largely a domestic markets issue. 

Mike North from Commodity Risk Management Group and Vault Ag tells Brownfield the market influences leading up to a peak price of around 20 dollars a hundredweight in November was driven by domestic demand. He says, “We had cheese go to $2.40. The class three milk market responded in kind and went over twenty dollars, and it was a really fun market. Now, you couple in the fact that we had a Mexican cheese facility that had some issues in their production lines. That shortened up their own availability so they were buying extra U.S. product. So again, the perfect storm.”

North says 20-dollar milk price peak was helped by two events that don’t normally happen at the same time. “There was an ongoing bid for product to fill the retail space and make sure consumers had access to cheese as we went into the fourth quarter. That was compounded by the fact that the government had decided that they were going to issue a new contract to buy cheese.”

North says he was encouraged by another price run in the cheese market last month when there normally isn’t high demand. “For us to find a bid in January at a time when we generally don’t have a domestic bid is a very good thing to see, and part of that is we have regional shortages of milk in a few different parts of the country. In other places, there’s surplus by the way, so it’s not like we’re running out of milk right now, but a little bit of tightness there.”

North remains optimistic about dairy prices for 2020.

(Find more with Mike North here.)

Brownfield interviewed North at the recent Wisconsin Corn-Soy-Pork Expo.