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Is There Light at the End of the Milk Price Tunnel?


Pressure has continued on milk prices with July Class III future closing below $14.00 on the last two days of the first week of July. The July price will be the lowest realized since May 2020. Then, it was the impact of Covid disrupting the industry. Now, it is the result of heavy milk supply and reduced international demand.


Milk production has been running above a year ago for the first five months of this year averaging an increase of 0.7% above the same period in 2022. That may not be an exceptionally strong increase, but with demand relatively stable and exports lower, the impact is magnified.


Cow numbers on the most recent milk production report for the month of May showed the nation’s cow numbers running 13,000 head more than a year earlier. Milk production per cow was 10 pounds higher than a year ago at 2,108 pounds per cow. The dramatic difference in milk prices of the first five months of this year compared to the first five months of 2022 has not yet impacted milk production in a negative way. The low milk prices this year indicates milk production needs to be curtailed for prices to be supported. We would hope that lower prices would stimulate demand but that has not happened to any great extent at present.


By ROBIN SCHMAHL

July 10, 2023

dairyherd.com


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