The USDA is setting its expectations for the dairy industry , and milk production is forecasted to be at a record high.
Last week at the USDA Agricultural Outlook Forum, Chief ag economist Robert Johansson believes milk production will reach 218.7 billion pounds, a 1.5 percent increase from 2017 levels. With that increase, prices are expected to worsen by 9 percent.
With this news, the dairy industry is bracing itself for another down year. Shawn Hackett, president of Hackett Financial Advisors, thinks what’s been playing out in the grain markets could soon be seen in dairy.
He says two factors could turn the markets around: China’s down milk powder production and production problems in New Zealand from bad weather.
“We see this combination coming together, creating a whipsaw effect for milk powder prices and stimulating the overall milk prices much higher,” he said on AgDay. “We think the market has gotten into a complacency that it ought not to be in.”
He says he’s optimistic that 2018 could be the year for milk price improvement. He suggests dairy producers not to oversell because he thinks there’s going to be “great selling opportunities later in the year.”
Hear why he thinks the scales could tip in demand’s favor on AgDay above.