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Economist says the dairy sector is “walking on a knife’s edge”

A dairy economist is concerned about the new USDA dairy production report which shows a big increase in the U.S. herd size.

University of Wisconsin Center for Dairy Profitability Director Mark Stephenson says, “We are at the highest cow numbers that we have seen in more than thirty years.”

Stephenson tells Brownfield the U.S. has added a lot of capacity to produce milk, and that doesn’t go away quickly unless prices plunge downward. “The good news for us right now is that demand is as strong as it is, so, plants are taking it but man, I think we’re walking a knife’s edge here.”

Stephenson says some demand information has keep the market steady for now, like the one-month extension of the Farmers to Families Food Box Program, the announcement of an upcoming dairy donation program, and exports. “Our price relationships for products are good relative to other exporting countries so there are opportunities, but you know, we can overwhelm them pretty quickly, too.”

Stephenson says right now, the U.S. dairy sector is benefiting from competitive prices for exports and the large volume of whey and powdered products being sold to China for their hog herds.

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