RaboResearch Anticipates Strong Dairy Margins Amid Tight Supplies and Healthy Demand
Source: DairyNews.today
As dairy markets continue to navigate tight milk supplies and robust demand, Lucas Fuess, an agricultural economist with RaboResearch, predicts favorable conditions for dairy producers will persist through the end of the year and into 2024.
“We expect both higher milk prices and feed costs to be around their lowest levels in four or five years,” Fuess shared with Brownfield Ag News. “Combining these factors, we’re looking at some of the healthiest margins we’ve seen in quite some time.”
The USDA’s recent base Class III milk price for September reached $23.34 per hundredweight, marking the highest level since June 2022. This boost is underpinned by continued limited milk production alongside stable domestic and international demand.
Fuess noted, “It’s really rare for the U.S. to go this long with weaker milk production versus the prior year. We’re usually the place in the world that’s growing our milk output, so this stagnation has finally caught up to us.” Enhanced milk components—such as higher protein and butterfat levels—have allowed processors to maintain product volumes despite tightening supply.
Looking to next year, Fuess suggests milk production levels may reset, potentially impacting prices. However, he remains confident that dairy margins will stay in profitable territory, supporting continued resilience in the dairy sector.
The USDA’s recent base Class III milk price for September reached $23.34 per hundredweight, marking the highest level since June 2022. This boost is underpinned by continued limited milk production alongside stable domestic and international demand.
Fuess noted, “It’s really rare for the U.S. to go this long with weaker milk production versus the prior year. We’re usually the place in the world that’s growing our milk output, so this stagnation has finally caught up to us.” Enhanced milk components—such as higher protein and butterfat levels—have allowed processors to maintain product volumes despite tightening supply.
Looking to next year, Fuess suggests milk production levels may reset, potentially impacting prices. However, he remains confident that dairy margins will stay in profitable territory, supporting continued resilience in the dairy sector.