Milk flush into summer
A dairy analyst says several states are now dumping an oversupply of milk because dairy plants secured more than enough product this spring at lower prices and other issues have caused disruptions.
Lucas Fuess with RaboResearch tells Brownfield spot milk prices have been sharply lower and it could take several months for the supply to contract.
“We’re past the peak of that spring flush, but there’s still plenty of product available, both in the upper Midwest and broadly across the country,” he shares. “Overall, I do think that going forward with these tough margins and lower milk prices, I expect farmers to cull some cows.”
Minnesota’s Hastings Creamery was closed earlier this month because of wastewater permitting issues which have caused dumping on farms throughout the state and Wisconsin. The Northeast Federal Milk Marketing Order also is allowing dumping into July to counter labor shortages at plants and other issues.
Fuess says higher costs for dairy farmers have meant very limited profitability and Dairy Margin Coverage Program payments have been triggered for every month of this year.
“We’re looking at Class III milk prices with numbers like 15 and 16 at the start and in Class IV just slightly higher,” he says. “Those I think are not profitable for basically any farmer across the country and it’ll be a few months of pain.”
He expects feed costs to decline later this year and demand to pick up which hopefully will bring prices more toward breakeven or better for farmers.