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Dairy Heifer Supply Tightens

The prevalent question being asked is just how it will be before milk prices increase significantly and move back up to 2022 levels. We did see record milk prices in 2022 and maybe matching those highs might not be feasible, but it would certainly be nice to see price quite a bit higher than they currently are. There are varying ideas as to what it will take to see significantly higher milk prices with most of them feasible to some degree.

Now if we think back to later 2021, culling increased substantially for a few months as low milk prices moved farmers into selling animals aggressively to boost income and reduce the expense of feeding cattle that were not top producers. The milk supply did not tighten to the extent that there was a shortage, but the perception of a shortage is what drove milk prices higher. Buyers of dairy products were concerned about the potential for a tighter supply and wanted to make sure they would have product to fill orders. Thus, a buying frensy took place for a few months which drove milk prices to record highs. The culling slowed down and eventually the concern subsided with cow number remaining below a year ago, but numbers increased from month to month. This took away the concern and milk prices have been lower ever since.


December 11, 2023



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