Milk output in the U.S. is on a historic weak streak, potentially signaling climbing costs for dairy products.
Production per cow was less than a year ago for a third month in a row, according to government data released Friday. The last time that happened was more than 20 years ago, said Nate Donnay, director of dairy market insight at StoneX Group.
Farmers are probably feeding their animals less, said Donnay. The cost of grains like corn is soaring this year due to drought, storms and robust demand. Labor and energy costs are also more expensive. It’s all hurting farmers’ bottom lines and making it difficult to afford feed.
“The most obvious contributor to this drop in cow numbers and slowdown in production is feed cost and availability,” Donnay said.
U.S. milk production in October was down 0.5% from last year, compared to StoneX’s forecast for a 0.3% rise.
The dairy cow herd also continues to shrink. This should eventually lead to higher prices for consumers, Donnay said.