Current dairy trends reflecting 2012 reactions to feed costs

A dairy economist says while recent dairy cow number declines haven’t hit a record, they are quite large.

Nate Donnay with StoneX says September milk production data shows year over year tightening, which was lower than he expected and continued declines in the herd.

“The slowdown has come from both a very sharp drop in cow numbers-it’s a dramatic drop—the USDA is saying 85,000 cows over the course of four months,” he says.

Donnay says the declines are likely still a response to a spike in feed costs and availability.  He compares the shifts in production and herd sizes to 2012 when feed availability was also tight because of drought across the Upper Midwest.

Donnay says once farmers adjust to feed costs, he expects growth to pick back up.

“With the herd down as much as it is down, it’s going to be difficult to get significant growth in U.S. milk production,” he says.  “It sounds bullish, and it is.”

And while China’s demand growth is expected limited, demand globally is strong which Donnay believes will keep prices supported in the New Year.

Donnay shared his thoughts during his weekly outlook forecast.

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