Dairy Producers Hold the Knife

May 11, 2015 12:00 PM
Dairy Producers Hold the Knife

In light of high beef prices, dairy producers see the value of their animals in the marketplace, notes Bryan Doherty, Stewart Peterson.

Power Hour Noon Logo“Beef prices are high, and dairy producers don’t want to get caught with a lot of inventories,” Doherty explains on the “AgDay” Agribusiness Update segment. “They’re quick at the knife to get rid of cows, and they’re likely going to be quick to get rid of heifers as well. I had one dairy producer say, ‘When I go to work in the morning, I ask my crew not about this cow, what she’s producing, but I ask, how much can she bring in the market?’ Because that’s a different way to view this.”

Meanwhile, the direction of the market has shifted several times in the past nine months.

“You went into fall with record prices and probably extended that rally a little further than anybody expected and held it a little bit longer,” Doherty notes. “But then those deferred months, they never came up, and then started to move down, and then they got soft, and they’ve been up twice now here this winter.  We’ve had some pretty good bounceback, the most recent one early this past week.”

The dairy industry sees potential for growth, though it will not be unabated.

“When there are profits, there’s always growth,” Doherty says. “That’s I think going to hinder the ability for milk to really take another run back up over $20 to $22 like we saw last year. Grain prices are cheap. That’s going to keep not necessarily expansion underway but keep the herd in check.”

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