The December Milk Production report will be issued on January 24th, marking the conclusion of another year of milk production statistics. Despite a minor dip since July, milk output has remained above the previous year’s levels. According to the World Agricultural Supply and Demand study, milk output in 2023 is expected to be 226.6 billion pounds, up from 226.5 billion pounds in 2022. Milk production is expected to reach 228.3 billion pounds this year, a record.
Despite low milk prices and farm closures, milk output remains high thanks to robust milk yield per cow. Cow numbers in November were 44,000 lower than in November 2022, although milk output is roughly equal to 2022. A prolonged period of low milk prices may reduce milk yield as more farmers leave the dairy industry and supply tightens. Risk management solutions like LGM Dairy and Dairy Revenue Protection may assist farms retain profitability or increase cash flow.
The length of low milk prices is unknown, although milk futures predict prices improving to some degree as the year passes. If underlying cash prices stay in a jagged sideways pattern for a lengthy time, subsequent milk futures will fall. The butter price has outperformed cheese, pushing Class IV futures higher. However, sufficient cream supplies are keeping churns active, and inventories is up from the previous year and continuing to rise. This may cause the butter price to go back to the levels seen in the first half of 2023, diminishing the present premium Class IV futures hold over Class III.
