The chart of the week is the monthly milk production change compared to the prior year. As one can tell from the chart, it’s been a long time since we have experienced a decline in milk output. How long? How about sixty months or five years! It’s been a great run for milk production but the trend is almost certainly coming to an end. Milk production during June and July were only up fractionally from the previous year and that is due in a large part to relatively cool weather relieving stress on cows. However, in June and July we experienced some of the largest net reductions in the milk cow herd in the last 10 years. August has likely experienced a strong milk cow herd reduction as well which has us believing that this month will be the first in five years to experience a milk output decline compared to the previous year. And with the CWT herd subsidized retirement issue, milk output declines are anticipated to intensify in September and onward which should be bullish for the dairy markets.
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