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Change in dairy production or demand needed for market support

The National Milk Producers Federation says its likely milk production is starting to realign with demand as high feed costs depress prices.

In its August Dairy Market Report, the organization says production is down by about two percent from its high in April which is higher than usual following a spring flush. 

While improving cheese prices have led to a recent recovery and domestic usage of milk is up slightly, analysts say the price recovery is fragile as the delta-variant leaves uncertainty surrounding future demand.

Mike Hutjens, professor emeritus at the University of Illinois, tells Brownfield that uncertainty could also be linked to a lack of price increases at this time which is typically tied to school milk demand. “We haven’t seen that nice increase,” he says.

National Milk says based on current futures markets, margins could remain below $9.50 through the end of the year triggering Dairy Margin Coverage payments for most months unless futures can find demand strength.

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