‘Beware the Flush’
January 27, 2020
What happens during this year’s spring flush will likely determine what happens with milk prices for the remainder of 2020, say University of Wisconsin dairy economists Bob Cropp and Mark Stephenson.
Stephenson says dairy markets are waiting on the next big news to give them direction. Barring any unforeseen hiccups or disruptions to markets, the next such event will be the spring flush in April, May and June. And that boils down to average daily milk production.
“If milk production is below 615 million pounds of milk per day during that time period, that’s tight and markets will worry,” says Stephenson. “If markets are much above 620 million pounds of milk per day during the flush, markets will say we have enough milk and there’s not much to worry about.
“[But] if you get below 615 million pounds of milk per day, markets could go up fast,” he says.
“And I don’t see that big of a flush coming. I’m staying pretty optimistic for prices [for 2020],” says Cropp. That's because poor forage quality will likely hamper milk per cow. And with dairy farms still in recovery mode, the likelihood of a lot of expansion is low.
Cropp sees Class III prices in the high $17s through the first quarter, reaching $18 in the second and third quarters, and into the $19 range for the fourth quarter of 2020. For the year, he’s looking for an $18.20 to $18.50/cwt Class III average, which would be at least $1.20/cwt better than 2019.
In the meantime, Class III prices have rebounded back to $18--or better. “Keep you eyes open, and if you need to put a floor under prices, you may have some opportunities this spring,” says Stephenson.