Multiple-Year Low Margins to Eventually Cut Supply
Dairy producers across the country are feeling the pain of miserable margins, but some are hurting more than others. Those in Class III markets will feel the brunt of some of the lowest Class III prices in years, and while relief is coming in the form of lower feed prices for all producers, a drop in costs won’t be enough to offset their declining milk checks.
“Although dairy economics are poor across the country, the gravity of the situation changes markedly from region to region,” said Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aires. “As cheese and whey prices have buckled under the pressure of strong output and weak exports, producers who are highly dependent on Class III prices are generally faring worse than their counterparts.”
Surplus milk supplies in the central part of the country have been pressuring the price paid for raw milk lower. Spot loads have been selling for discounts of at least $10/cwt. under the Class III price since December 2022, Ganley said. However, scorching and often record-breaking temperatures have started to shift markets in the southern part of the central United States as high temperatures and new capacity have tightened supplies.
By FRAN HOWARD
July 18, 2023