By Catherine Merlo

Nearly a week at World Dairy Expo has led me to think that better days might really lie ahead for the U.S. dairy industry.

The distress of my home state’s dairy producers still trailed me when I arrived here Sunday from California. Everyone wondered what the mood would be among producers and exhibitors at this Madison, Wis., event.

For the first day or two, people seemed unsure but hopeful at this massive show, with its 755 exhibitors from 24 countries, 65,000 attendees, eight cattle shows and five sales events. Outside, the skies filled with dark clouds, rain and thunder. Among the throngs of attendees, I saw fewer out-of-state dairy producers here than perhaps at any time in the last five years.

But by Friday, there was no mistaking it. People are beginning to believe that the industry is headed for a rebound. Not everybody has the same explanation for why a recovery is coming. A few producers told me somewhat philosophically that prices were so bad now, there was no where to go but up.

But there are also tangible signs appearing:

• Dairy market analysts are predicting milk prices could rise to $14.50/cwt. to even $18/cwt. in the coming months. (Read Jim Dickrell’s “Better Dairy Days Ahead.”)
• Dairy exports are starting a slow rebound. (Also see Dickrell’s “Dairy Exports Start Slow Rebound.”)
• Cooperatives Working Together this week announced another herd retirement round, the third this year. That’s expected to further help align milk supply with demand.
• There’s news that some California processors are actually looking for milk to fill their orders. That includes two of the major players, Hilmar Cheese and California Dairies Inc. Supplies are tight but sources there don’t expect milk production to surge. That points to higher prices ahead. (See “California Short of Milk.”)
• Feed costs are dropping. Corn, soybeans and hay prices are among those projected to fall.

There were other positive indicators as well. Although World Dairy Expo attendance was down slightly, several exhibitors said they were very pleased with the turnout this week. Jim Zomer, director of sales and marketing for Van Beek Natural Science told me his group had generated significant sales at the company’s booth this week. This week ranked, Zomer said, “equal to or better than last year.” Moreover, he said his company’s sales have been increasing noticeably over the past two months.

I met two organic dairy producers who said 2009 had been good to them, bringing them milk prices of just under $30/cwt. One of them, Carroll Wade of Jasper, N.Y., said he’d wager “there’s a real possibility that prices for conventional milk could reach $22/cwt. by December 2010.” He foresees the current downturn forcing enough producers out of the business to create shortage of milk.

Perhaps the most inspiring comment came from a Minnesota dairy producer who stood behind me in line Tuesday as we waited to order our lunch in the great Exhibition Hall. My hands were full of camera gear and, unfortunately, I didn’t get his name. Even so, I remember he said that while 2009 had been tough for him, he was much heartened as he walked among the many exhibits and saw the massive investments made in this industry by the many businesses that serve the dairy industry. It reminded him that many people believe in dairy’s future.

All these are good signs. And I should have recognized another one sooner. All that rain that fell here this week was – at least in the California mindset -- a good omen. If you were a lifelong resident of California’s Central Valley, where rain is desperately short, you’d know that nothing could be more welcome.

Catherine Merlo is Western editor for Dairy Today. You can reach her at cmerlo@farmjournal.com.