Forthcoming Dairy Market Expectations

Published on: 09:37AM Aug 22, 2008
The chart of the week is January through July milk per cow yield growth.  Milk production is a key monthly statistic that enables analysts to anticipate changes in forthcoming milk and dairy product supplies. Milk per cow yields, or the average amount of milk a cow produces during a particular time period, makes up half of the equation of milk production. Typically, milk per cow yields grow about 1.8% each year.  However, the initial estimate for July’s milk cow yield was 1 lb. less than July 2007’s large gain.  The 2008 through July total milk per cow yield after a leap day adjustment was just .8% greater than 2007 and significantly less than recent years. Why is this occurring? In my opinion likely the biggest reason is due to the increase in feed costs which usually propels milk farmers to lessen feed rations and cause milk cows not to perform as well. Why are we watching milk per cow yields so closely? Besides the impact on current milk supplies, milk per cow yields can be an indicator of forthcoming milk cow herd contraction and expansion. And if milk per cow yields remain disappointing in the coming months it may signal that a reduction in the milk cow herd could occur sooner than later which may be very bullish for the dairy markets in 2009. 
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