As dairy producers know better than anyone, milk prices in the U.S. continue to feel downward pressure. What’s causing it? Analysts say global supplies are to blame, helping to push prices lower.
“As we look at the stage that’s being set for the year ahead, we have a lot of stocks to chew through,” said Mike North of Commodity Risk Management Group on AgDay. “We filled a lot of cracks last year trying to make up for China’s loss of imports, and as we’ve worked our way forward we need to find a new home for all this new product. The pressure that’s putting on milk prices is pretty significant.”
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He says prices could continue to decline in the near term. He wouldn’t be surprised to see a Class II milk price in the $12 to $13 range. Informa Economics analysts agree, but add that milk prices could turn around in 2016. They expect global prices to improve and suggest U.S. dairy products could become more competitive in the coming months leading to a price turn around.