Milk Production Drops Reason for Price Strength

December 6, 2009 06:00 PM

By Dairy Today editors

Declines in milk production, not rebounding consumer confidence, are the reason for recent price strength in dairy markets, says Robert Tigner, a dairy Extension specialist with the University of Nebraska.

"The restaurant performance index has improved [slightly] since its January 2009 low, but is still in the contraction area according to the National Restaurant Association,” he says. "And the Consumer Confidence Index has been effectively flat since January. These two indicators are not showing that the psychology of the U.S. economy has begun to improve.”

Tigner also notes that year-to-date dairy commercial disappearance numbers are still down 1.1%. Butter is down 7.8%; non-fat dry milk is off 6.2%. The bright spots are fluid milk, up 1.2% and cheeses. American style cheese disappearance is up 4.5% and other style cheeses are up 0.6%.

October milk production in the 23 major dairy states was down 1.1%, with cow numbers off 196,000 head from a year ago and down 22,000 from September 2009 in these states. September milk production in the major dairy states was also revised down 0.1%.

"Drops in milk production are the largest reason behind milk price rises rather than increased demand,” Tigner says.


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