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2019 Could be the year that the dairy industry bounces back

Class III and IV futures are forecast to peak in the fourth quarter of 2019. (Photo: Dairy Markets and Policy)

Hope springs eternal after a long winter, and dairy experts are feeling optimistic that the dairy industry may be showing signs of recovery.

In their April “Dairy Situation and Outlook” podcast, UW-Madison’s Mark Stephenson and Bob Cropp believe that current trends in milk production, based on the most recent report released by the U.S. Department of Agriculture, could lead to a higher milk price forecast.

Bob Cropp says reduced demand from China as they deal with African Swine Fever could be behind a 20-cent dip in dry whey prices in the first part of this year, which has limited the Class III price by at least a dollar.

“The news that milk production has really slowed ought to help straighten things out and keep milk prices moving in the right direction,” said Cropp, adding that cows numbers had dropped significantly. “Nationally, we’re down 10,000 cows from February to March 2019.”

Wisconsin ag economists are optimistic for $17 milk by the fourth quarter because of continued reduction of the dairy herd. According to the USDA report, U.S. milk production fell 0.4% in all 50 states and down 0.1% for the top 23 dairy states. During March, Wisconsin cows produced 2.62 billion pounds of milk, up less than 1 percent from last year. 

“I think this is the year that we’re looking for for the recovery.” 

University of Wisconsin’s Mark Stephenson says every month reports are indicating the outlook for prices is improving.

“Most of the countries that are export competitors around the world have got signs of tightening markets too so it’s a time for significant recover—the first time in almost five years.”  

Both say declining milk production is positive for prices and if improved cheese stocks and sales continue, milk futures should pick up before the end of the year.

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