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Broker says dairy market “stagnant”

A market analyst says the dairy markets are stagnant.  “Sideways to lower is what it’s been doing.  It’s dead.  It’s over-supplied.  The globe has plenty of product.  There’s cows stacked on top of each other in the European Union.”

Carl Babler with Atten Babler Risk Management tells Brownfield it’s tough to capture marketing opportunities in dairy right now.   “We’re not seeing big spikes and big fallouts, but we’ve been setting into somewhat of a stagnation here, and it’s not been easy to pull a good opportunity out of a sideways market.”

He says farmers must acknowledge the risk of prices falling further and then play defense by choosing a strategy to set a floor under their price with risk management tools.  “They’re out there with their backs to the wall.  They’ve got to play defense, and the way we’re doing it is using put options in the milk market to put a line under this market of protection.  Pay the premium.  If the market goes back up, that’s fine, but if it goes down, we’re covered.”

With world dairy production going up, Babler says the only thing that can turn prices right now would be a windfall demand situation or a large reduction in herd sizes.  He is confident the market will eventually rebound.