Increased Exports, Production Challenges Could Push Milk Prices Higher
February 6, 2020
The feed quality hangover from 2019 crops is well-documented and is starting to hit milk production metrics throughout the country. Could it be enough to move the needle on prices? One analyst says increased demand from China and reduced fat production because of feed issues could push milk prices higher this year.
“We're still balancing the bigger supplies overall along with the demand pace, so demand right now in the United States continues to be kind of about the same,” Naomi Blohm of Stewart-Peterson told “AgDay TV” host Clinton Griffiths. “What we're hoping for is continued export market increases. That'll be of course dependent on Phase One, but the phase-one deal is supposed to show an increasing demand for milk powder and for whey powder so that's really important to be aware of.”
Additionally, markets are hoping for more cheese demand, because that’s what led the marketplace higher in 2019. When it comes to milk production, Blohm says it is leveling off. However, what she’s most interested to keep an eye on is component issues related to feed challenges.
“So here's what's happened in Wisconsin. We had a horrible hay crop; we barely had four cuttings of hay and what we received is horrific,” she explains. As a result, dairymen who typically grow corn for both silage and feed ended up keeping most of their production this year for silage, “because they didn’t have the hay crop. So now, we have parts of Wisconsin where we are feeding wheat to the dairy cow.”
Blohm says her understanding is that milk production shouldn’t suffer, but fat levels in the milk will. She says that’s an important thing to watch moving forward particularly as corn basis in Wisconsin continues to be positive, indicating corn supplies are short.
“The cows are eating wheat, and we're going to see lower fat percentages coming into production ahead, so I don’t think this milk story is over,” she says. “And if we can see the Chinese demand pick up, I think we're going to see higher prices ahead.”