Is there Hope for Higher Milk Prices?
Source: dairynews.today
Many commodity markets have been unpredictable lately due to the volatility of the equity markets and the uncertainty over the impact of tariffs. Trend traders do not like uncertainty, which leaves much of the activity being short-term trades as traders scalp the market in hopes of making a quick profit. However, that can become difficult as well.
Robin Schmahl
Commodity Broker at AgDairy LLC
Commodity Broker at AgDairy LLC
The dairy markets had been under pressure for about a month before it seemed prices had reached the bottom and had more than factored in any impact that could come fr om tariffs. This resulted in a three-day rebound in cheese prices and milk futures. It was hoped the market would break the pattern that had been prevalent for a few months of short-lived price rallies. Those hopes were dashed as milk futures fell back nearly eliminating the gains.
The buyers of cheese and butter see no need to be aggressive with prices increasing as orders need to be filled. Once the immediate needs are met, buyers become less aggressive and step back. As the buyers step back, sellers continue to bring loads to the spot market to sell as manufacturers want to lim it building inventory at the plant level.
Commercial disappearance of dairy products has been running about 0.5% below a year ago. A 0.5% decrease is huge and has a significant impact on prices. The same is true in reverse. If demand is 0.5% higher than the previous year, higher prices are usually experienced.
Right now, we have slower demand compared to a year ago with spring flush nearing. It is difficult to know how much milk production will increase during spring flush. It will be higher than it has been, but it is not expected to exceed the level of a year ago. The January Milk Production report showed milk output was 0.1% above the previous year, but gains may not hold when compared to the gain during the spring flush last year. However, there are more cow numbers and an improvement in production per cow could take place. If we do see gains, those gains may be minimal. Spring flush will make more milk available to the market. The key will be if demand improves along with increasing production to keep supplies of dairy products from building.
Fluid milk sales have been struggling for years, with the combination of conventional and organic milk running below the previous year most months. There have been reports of fluid milk consumption improving recently, but January fluid milk sales were 0.5% below January 2024. The positive aspect is that butter and cheese consumption continues to grow.
Not only has domestic consumption grown, but also international demand. Cheese exports in January totaled 46,680 metric tons, up 22 percent from January 2024. Butterfat exports jumped 145 percent from a year earlier totaling 7,101 metric tons.
There are aspects of the market that could result in higher prices as the year progresses, but the market now needs to prove that higher prices will be necessary.
Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com.
The buyers of cheese and butter see no need to be aggressive with prices increasing as orders need to be filled. Once the immediate needs are met, buyers become less aggressive and step back. As the buyers step back, sellers continue to bring loads to the spot market to sell as manufacturers want to lim it building inventory at the plant level.
Commercial disappearance of dairy products has been running about 0.5% below a year ago. A 0.5% decrease is huge and has a significant impact on prices. The same is true in reverse. If demand is 0.5% higher than the previous year, higher prices are usually experienced.
Right now, we have slower demand compared to a year ago with spring flush nearing. It is difficult to know how much milk production will increase during spring flush. It will be higher than it has been, but it is not expected to exceed the level of a year ago. The January Milk Production report showed milk output was 0.1% above the previous year, but gains may not hold when compared to the gain during the spring flush last year. However, there are more cow numbers and an improvement in production per cow could take place. If we do see gains, those gains may be minimal. Spring flush will make more milk available to the market. The key will be if demand improves along with increasing production to keep supplies of dairy products from building.
Fluid milk sales have been struggling for years, with the combination of conventional and organic milk running below the previous year most months. There have been reports of fluid milk consumption improving recently, but January fluid milk sales were 0.5% below January 2024. The positive aspect is that butter and cheese consumption continues to grow.
Not only has domestic consumption grown, but also international demand. Cheese exports in January totaled 46,680 metric tons, up 22 percent from January 2024. Butterfat exports jumped 145 percent from a year earlier totaling 7,101 metric tons.
There are aspects of the market that could result in higher prices as the year progresses, but the market now needs to prove that higher prices will be necessary.
Robin Schmahl is a commodity broker with AgDairy, the dairy division of John Stewart & Associates Inc. (JSA). JSA is a full-service commodity brokerage firm based out of St. Joseph, MO. Robin’s office is located in Elkhart Lake, Wisconsin. Robin may be reached at 877-256-3253 or through the website www.agdairy.com.
