Analyst: Milk Prices ‘Not Out Of The Woods Yet’

Farmers around the country are seeing prices start to slightly improve. And while that provides hope, one analyst says we’re not out of the woods yet.

“I think if you look at where we’re at today, we’re already doing much better than most people had thought,” Mike North told AgDay host Clinton Griffiths.  According to North the large inventories of dairy products around the world are daunting, but the U.S. has had back to back months of strong export sales to offset that pressure.

“First quarter had dairy exports up 14%. We like to see that,” he explained. “We did see a little softer tone in China in the month of March though and that could be problematic, so as we go forward, the big question for us is how we perform domestically because while the exports are important, they still only account for 14% of our total milk production.”

North said domestic demand has been hit and miss throughout the year, but as grilling season arrives there could be an uptick as people buy more cheese. The current bright spot is product prices, North explained.

“I think what we’ve been seeing this year is a little bit of an earlier move to the market by buyers as they prepare for the balance of the year,” he said. “So we’re seeing cheese prices that are holding the mid-$1.50s and we’re seeing butter prices in that $2.30 zone and stronger powder which is a big surprise given the massive inventories, not just here but in Europe.”

North warned the large cow numbers will continue to pressure prices.

“So, while we’re painting better prices for the future, that also keeps more cows in the barn and could be our very demise as we head into summer,” he said. “We’re watching very cautiously and we’re hopeful for higher prices but I don’t believe that we’re out of the woods just yet.”