Milk Production Begins to Stabilize

December 8, 2015 12:00 PM

Although milk production has begun to stabilize, dairy producers should expect sideways movement for the milk futures price in the near term as they turn the calendar to 2016, says Naomi Blohm, Stewart-Peterson.

“Between $14.50 and $15 is going to be where we’re at for a little while,” Blohm tells “AgDay” host Clinton Griffiths during an Agribusiness Segment filmed this month at Top Producer’s 2015 Executive Women in Agriculture conference. “We still have a supply issue that is just keeping this market suppressed right now and prices lower. The one good thing that we saw in the most recent milk production report is that milk production is starting to stabilize. It only grew at 0.1% from the last report.”

Part of the milk price story is one of geography.

“We’re not really reducing the herd, but what the western states have been losing for production, the eastern states are kind of making up for,” she explains.

Going forward, producers face challenges such as a higher dollar and lower exports. Yet they’ll enjoy higher prices for components such as butter and cheese.

“Butter is so high because McDonald’s went from using margarine in products to butter, and they all of a sudden had to buy enough butter for all their stores,” Blohm says. “That’s why the butter supply is so tight right now. … We are still 25 cents higher than the global cheddar cheese prices. It is [a good thing], but we’re not exporting it.”

Meanwhile, dairy exports do have one bright spot in the form of powdered milk because prices are at lows last seen in 2009.

“That export is actually up 48%,” Blohm points out.

Click the play button below to watch the complete interview with Blohm on “AgDay.”

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