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Dairy analyst expects milk prices to hit bottom this year

A dairy economist says it’s hard to find bright spots in the dairy outlook right now.  Peter Vitaliano with the National Milk Producers Federation says April was the seventh straight month with higher cow numbers than the previous year, and although production per cow was up fractionally, it was enough to oversupply the market.  He calls this expansion anemic compared to other years. “It was not an explosive expansion the way these kinds of prices would normally have generated, and I think what’s happening is feed costs are very, very high and demand has been affected by the bout of inflation that we’re just slowly coming out of.”

Vitaliano expects the milk prices to bottom out over the next several months. “And, at the low point in particular, with the DMC Dairy Margin Coverage margin which is kind of a good broad indicator of profitability for dairy farms, futures are indicating that that thing could get close to four dollars per hundredweight for the first time in quite a while.”

Vitaliano tells Brownfield the low milk prices to farmers won’t last long but, “We’re looking for, you know, some relief, but it’s not going to be until towards the end of the year according to what the markets are telling us.”

Vitaliano says overall, dairy demand by consumers is not usually sensitive to high prices as consumers consider them a necessity, but consumers are tightening their belts more because of inflation.