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Dairy economist concerned about NAFTA impact on milk price

A University of Wisconsin dairy economist says milk prices are improving as expected, but changes in NAFTA might end that trend.  Dr. Bob Cropp says the Class Three milk is about $2.75 higher than it was a year ago.  Cropp tells Brownfield that is in part because production growth is slowing.  “The milk production increase over a year ago is slowing.  That’s good news.  For three months in a row now, we’ve been running less than a 2% increase, and if you keep below 2%, you’re going to have stronger prices depending upon sales and exports.”

And, Cropp says those exports have been very good this year.  “We exported about, a little over 14% of our milk production.  Everything was up considerably and cheese exports up about 24%, butter exports up over 100% from a year ago, and strong exports of nonfat dry milk, skim milk powder, and whey products.”

Cropp says that could all change if the U.S. fails to keep the NAFTA agreement.  “President Trump says maybe we have to get rid of NAFTA.  Well, if they do that, it would be quite a blow to the dairy industry.  It would be a loss of exports and would definitely lower our milk price.”

Cropp expects the Class Three price to remain around the $16.50 per hundredweight range in the near future, and $17.00 by October.

 

Dr. Bob Cropp is a Professor Emeritus at the University of Wisconsin’s Department of Ag and Applied Economics.