Milk prices are at near to record highs in the U.S. so far in 2022 and with milk futures in the mid-20s per hundred weight it looks like it could stay that way for a while.
The market is being driven by strong demand, but also tight milk supplies as indicated in USDA’s most recent dairy data. U.S. milk production for April was bullish at 19.2 billion pounds down 1% from last year. Plus cow numbers were steady at 9.4 million head and production per cow was nearly static. Robin Schmall, Agmarket.Net Dairy Market Analyst, says, “We were unchanged on production per cow in 50 states, one pound below a year ago in the 24 states. Again that coupled with the cow numbers being unchanged is supportive to the market.”
The outlier has been South Dakota which saw monthly production increases of nearly 21% in March and nearly 17% in April verses 2021. And there is additional production that has been already permitted.
Marv Post, President of the South Dakota Dairy Producers Association, says, “We have those producers that are anxious to build and we can bring more cows in in that economic engine for the state of South Dakota.
However, the chicken and egg is that producers need additional processing capacity before they can add more cows. So the industry is looking at expanding capacity within existing facilities or with a new plant.
Post says, “We have nine milk buyers in the state of South Dakota. It’s never bad business to invite another one to come to South Dakota.” Currently, they are actively trying to recruit another milk processor to the I-29 Corridor.
