USA: The dairy industry anticipates stability in product prices for 2024
Source: The DairyNews
The dairy industry anticipates stability in product prices for 2024 compared to the previous year, with potential improvements in net returns, as highlighted by University of Missouri Extension economist Scott Brown during the 2024 Missouri Dairy Expo.
Brown emphasized that this year's outlook hinges significantly on factors such as average weather conditions and feed costs, with demand playing a pivotal role in shaping market dynamics.
"Domestically, consumers may face tighter budgets for dairy purchases, compounded by higher interest rates and reduced COVID financial assistance, amid a slower economy," noted Brown.
However, there are positive indicators, including a decline in milk production over the past seven months and a decrease in dairy cow inventory since early 2023. Notably, states like California, Colorado, and Texas, which had previously witnessed growth, are now experiencing declines.
Despite lower-than-expected cheese prices due to sluggish demand, recent signs of recovery in cheese prices have provided some support to milk prices. Nevertheless, global demand, particularly from China, has not met expectations, with economic challenges impacting imports of whole milk and skim milk powder.
Mexico remains a crucial market for U.S. dairy farmers, although challenges persist in other regions. Australia is projected to witness growth in milk supply as it rebounds from drought, while U.S. growth is expected to be marginally higher.
Looking ahead, Brown highlighted the significance of the federal milk order hearing in shaping the industry's landscape, particularly regarding the Dairy Margin Coverage (DMC) program. Anticipating potential updates in the next farm bill, Brown emphasized the need for flexibility in production history and DMC payment eligibility criteria.
As Missouri grapples with declining dairy cow inventory and smaller herd sizes, Brown emphasized the instrumental role of DMC in supporting local dairy producers, underscoring the importance of ongoing policy discussions to address industry challenges.
"Domestically, consumers may face tighter budgets for dairy purchases, compounded by higher interest rates and reduced COVID financial assistance, amid a slower economy," noted Brown.
However, there are positive indicators, including a decline in milk production over the past seven months and a decrease in dairy cow inventory since early 2023. Notably, states like California, Colorado, and Texas, which had previously witnessed growth, are now experiencing declines.
Despite lower-than-expected cheese prices due to sluggish demand, recent signs of recovery in cheese prices have provided some support to milk prices. Nevertheless, global demand, particularly from China, has not met expectations, with economic challenges impacting imports of whole milk and skim milk powder.
Mexico remains a crucial market for U.S. dairy farmers, although challenges persist in other regions. Australia is projected to witness growth in milk supply as it rebounds from drought, while U.S. growth is expected to be marginally higher.
Looking ahead, Brown highlighted the significance of the federal milk order hearing in shaping the industry's landscape, particularly regarding the Dairy Margin Coverage (DMC) program. Anticipating potential updates in the next farm bill, Brown emphasized the need for flexibility in production history and DMC payment eligibility criteria.
As Missouri grapples with declining dairy cow inventory and smaller herd sizes, Brown emphasized the instrumental role of DMC in supporting local dairy producers, underscoring the importance of ongoing policy discussions to address industry challenges.
