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Higher feed costs likely to cut milk margins

A commodities financial expert says the top dairy managers this year will be the ones planning for tight margins and rising feed costs.

Curt Covington, Senior Director of Institutional Credit, with AgAmerica tells Brownfield while milk prices might seem high, rising input costs have put some operating margins under stress.

“Those farmers who have done a good job on contracting their feed, or hedging their feed, or have a plan to control those costs are the ones who will be the haves, not the have nots at the end of the season,” he says.

In some cases, he says dairy farmers are shrinking their herds to manage costs, especially in areas of the Pacific Northwest or drought-stricken regions.

“We hear, and we have seen, and we have talked to farmers who said they are considering culling their herds and/or are moving cattle to market sooner,” he shares.

USDA’s latest milk production report shows the dairy herd down 96,000 head from last year, but up 3,000 on the month.