USDA reports indicate production was up just 0.4% in September, but expansion continues throughout the upper Midwest. States like Michigan, Wisconsin, South Dakota and Kansas are growing production capacity, according to Mike North of Commodity Risk Management Group.
The big exception is California which reported 117 million lbs. less milk this September compared to September 2014. North says California’s consistent decline in production is the result of regionally specific challenges. “It has a lot to do with butter and class four markets as they play against the feed markets in the West,” he explains.
Current $15 and $16 milk prices aren’t discouraging the culling of cows, he says.
“As more barns go up, as additions get put on existing barns, and as the existing infrastructure on a dairy gets filled out, ultimately there’s a continued demand for cattle,” North says. “We are looking at ongoing expansion through the end of this year and maybe into early 2016.”
North admits processors in the upper Midwest weren’t able to keep up with last year’s growth, but adds that they see the issue and are working on increasing capacity to handle current growth.
“Over the next couple of years, we will see expansion in the processing community,” he says.
Watch Mike North’s interview with Tyne Morgan in this AgriBusiness segment of AgDay: