Overproduction of milk could continue to impact the dairy market as 2019 just begins, according to a market analyst.
The last milk production report from USDA showed an increase of 0.6% for milk despite few cows, says Naomi Blohm, senior market adviser, Stewart-Peterson.
“It is coming down but not on the pace it needs to come down,” Blohm says of milk production. “We are doing more slaughter, so we are trying to make that herd a bit smaller.”
Milk overproduction can be attributed to increasing efficiency of producers who have maximized genetics and feed stuffs while investing in technology. Unfortunately those best practices have still resulted in an oversupply and a subsequent down market.
Another pitfall of the increasing milk supply is an overabundance of cheese.
These are reasons why Class III prices continue to be hovering at the $14/cwt range, Blohm says. Powder prices is the one bright spot that Blohm sees going into 2019.
For more on Blohm’s outlook for the dairy market and advice on looking in prices watch the AgDay video above.