U.S. Herd Dairy Herd Reaches 3-Year High: Can Prices Keep Up?

jessi989
5 hours ago
2 min read

Cheese prices have been falling like a rock since the beginning of June. June, being the dairy month, has not been able to support cheese prices. This has negatively impacted Class III milk futures, taking the July contract down to the lowest level since early April and near contract lows. Subsequent months have followed suit but have not fallen to the same extent as the July contract. This has dimmed the price potential for milk.

The May Milk Production report did not provide any support to the outlook for milk prices. Milk production in the U.S. increased 1.6%, making it the second month of a gain of that extent. Milk production has been gaining each month so far, and there seems to be nothing to slow milk production down. The potential for higher milk prices was met with increased milk output, and lower milk prices likely will be met with greater milk output as well. Such is the nature of farming, whether in dairying, grain production, or livestock production.

The very evident standout is the increase in cow numbers. I have written about this a few times, and I do not want to keep beating the drum, but high beef prices have tightened the replacement heifer market and increased heifer prices substantially. Cow numbers are growing due to dairy producers holding onto cull cows rather than purchasing heifers. The Mary production report showed cow numbers increasing 5,000 head from April and up 114,000 head from May 2024, totaling 9.45 million head. This is the highest number of cows since August 2021. Naturally, milk production is going to be higher.

Click here to continue reading