USA: Dairy Industry Sees Strong Performance Amid Strong Prices and Production
Source: DairyNews.today
The National Milk Producers Federation (NMPF) has highlighted the dairy industry's strong performance this year, marked by robust prices and production, following the appointment of Brooke Rollins as the new Secretary of Agriculture.
Chris Galen, Senior Vice President of Member Services and Strategic Initiatives at NMPF, reflected on the current market conditions during an industry update.
Galen contrasted the present climate with the challenges faced during the Great Recession, when dairy prices plummeted. He noted, "We’re experiencing much stronger prices now. While cheese prices have softened from their summer highs, margins remain healthy. With a solid harvest in the Corn Belt, input costs, such as for corn and soybeans, are manageable, making this a strong year for dairy farmers."
Despite the favorable conditions, Galen emphasized a key question: how long will these strong margins last? His outlook suggests that dairy production may not ramp up significantly in response to the improved prices and margins. “In the dairy industry, as in agriculture more broadly, high prices typically lead to increased production, which eventually shifts the supply-demand balance and brings prices down,” Galen explained, underscoring the cyclical nature of the industry.
Galen contrasted the present climate with the challenges faced during the Great Recession, when dairy prices plummeted. He noted, "We’re experiencing much stronger prices now. While cheese prices have softened from their summer highs, margins remain healthy. With a solid harvest in the Corn Belt, input costs, such as for corn and soybeans, are manageable, making this a strong year for dairy farmers."
Despite the favorable conditions, Galen emphasized a key question: how long will these strong margins last? His outlook suggests that dairy production may not ramp up significantly in response to the improved prices and margins. “In the dairy industry, as in agriculture more broadly, high prices typically lead to increased production, which eventually shifts the supply-demand balance and brings prices down,” Galen explained, underscoring the cyclical nature of the industry.
