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Wisconsin Ag News Headlines |
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Cropp: Milk Price Slide Beginning to Happen
Wisconsin Ag Connection - 10/22/2014
It's been a great run, but those record high milk prices paid to farmers this year are starting to come back down. That's what Bob Cropp with the University of Wisconsin-Extension said in his monthly Dairy Situation and Outlook report. The professor emeritus says milk production has been going up and dairy exports have slowed down in recent weeks, which will trickle down to the producers' pay checks.
"Milk cow numbers only increased 2,000 head from August and were 0.6 percent higher than a year ago, but milk per cow was much higher at 3.4 percent above September a year ago," he noted in his latest assessment.
And as more product goes on the market, less of it is being shipped to customers in other countries.
"The latest dairy export report was for August showed that compared to a year ago, exports were 59 percent lower for butter, 10 percent lower for nonfat dry milk, 20 percent lower for dry whey, 36 percent lower for whey protein concentrate and 11 percent lower for lactose," Cropp said. "But, cheese was still 11 percent higher. Due to increase in world milk production and China's much lower dairy imports than earlier in the year world dairy product prices have declined substantially and are considerably lower than U.S. prices lowering U.S. exports."
As he said in recent months, Cropp explains that world dairy product prices are lower than U.S. prices, making it hard to compete against other producers in countries like New Zealand.
Looking at trends for the rest of the year, Cropp says the Class III milk price--which was $24.60 for September--will be near $23.95 for October and then falls to around $19.50 by December.
"The year will finish with cow numbers averaging about 0.4 percent higher than a year ago and milk per cow 2.1 percent higher resulting in total milk production near 206.3 billion pounds," he said. "The higher milk prices experienced and much lower feed costs than a year ago has resulted in very favorable
margins for dairy producers."
For 2015, Cropp predicts that the Class III price could be around $18.25 by January and then falling into the $17s most of the year with the possibility of even being below $17 mid-summer before some strength in the fall.
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