County Ag News

Dairy Situation and Outlook

Dairy producers are currently receiving prices for their milk that are considerably less than they were a year ago. Milk prices in 2014 and into 2015 were exceptionally high and feed prices had declined from the spikes caused by the drought in 2012. Currently we are looking at lower milk prices but commodity and feed prices have declined throughout 2015. As a result the margin of milk income over feed costs has remained in the $8 to $8.50 range.

September has been a mixed bag regarding dairy product prices on the Chicago Mercantile Exchange (CME). Both butter and nonfat dry milk prices have been improving and as a result the September Class IV price will be near $15.10 compared to $12.90 in August. 

But, cheese and dry whey prices have weakened. With these lower prices the September Class III price will be about $15.85 compared to $16.27 in August.

The outlook for milk prices for the reminder of the year and into 2016 is not for higher prices. Once stocks of butter and cheese are built to levels for the holidays by October or early November butter and cheese prices will likely weaken. Milk production is declining seasonally but is above a year ago and at levels to build stocks. 

While restaurant and food service demand has been strong for butter and cheese, dairy exports are much lower and the result is stocks are building. In part due to a strong US dollar dairy exports have been reduced. July exports compared to a year ago show butter exports down 58 percent, cheese down 21 percent, nonfat dry milk down 22 percent and dry whey down 8 percent.

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