The USDA has projected higher milk production in the last World Agricultural Supply and Demand Estimates (WASDE) report at 228.7 billion lbs. on a larger expected cow inventory. That could keep near-term pressure on prices while demand is maybe slow to rebound in the grocery store.
“What we’ll look for when you get price pullback is that demand just doesn’t spring up overnight. It grows over time.” says Bryan Doherty of Total Farm Marketing. “Demand grows when prices set back. It’s an economic principle that’s as old as the ages. Lower prices equal a higher quantity in demand. So, we do expect demand to increase and pick up, and ultimately that will ultimately help provide a floor [for future prices.]”
Meanwhile, exports of dairy products are forecasted by the USDA to be lower in 2023 with imports of many dairy products rising. However, the agency predicts Class III prices to improve later in the year, pulling the all-milk price to $20.65 per cwt.
April 20, 2023