High input costs, falling milk prices amid surplus supplies, and high beef prices will continue to encourage dairy producers to cull heavily until milk margins improve. Surplus milk supplies are so heavy in some regions that producers have had no alternative but to dump milk or basically give it away, according to Sarina Sharp, analyst with the Daily Dairy Report.
“Poor margins are taking a heavy toll on dairy producers, and milk futures project even harder times ahead,” Sharp said. “Some loads of milk are being sold for little more than the freight required to haul it from the farm. For these producers, deductions will result in mailbox milk prices far lower than the milk futures market currently projects.”
Since mid-month, the June 2023 Class III futures contract has been trading below $15/cwt. If that value were to hold, it would mark the lowest Class III price since May 2020, during the height of both the pandemic chaos and the spring flush.
By FRAN HOWARD
June 26, 2023