LUBBOCK, TEXAS (RFD NEWS) — Milk production is still growing, but the pace is slowing as dairy markets split between ample milkfat supplies and strong protein demand. March milk production increased 2.3 percent on a liquid basis, marking the fourth straight month of year-over-year growth.
Butter has softened as milkfat supplies remain ample. CME butter prices eased over the past month, even as overall milk production gains decelerated.
Skim solids are telling a different story. Nonfat dry milk prices set records through April and into May as new cheese capacity and strong demand for high-protein dairy products competed with dryers for milk. Use of yogurt, cottage cheese, and whey protein concentrate also continued to grow.
Consumer pressure remains a risk. Inflation accelerated in April, sentiment weakened, and softer foodservice volumes weighed on domestic cheese and butter use.
The Class IV rally helped lift the March Dairy Margin Coverage margin to $9.57 per hundredweight.
Farm-Level Takeaway: Strong protein demand is supporting milk prices, but consumer pressure and regional margin differences remain important for dairy producers.
Tony St. James, RFD NEWS Markets Specialist
Jake Charleston with Specialty Risk Insurance says recent futures market moves are leaving cattle producers unsure about price trends.
Drought remains a major risk, with the ERS reporting that 98 percent of the U.S. cotton production area was affected by drought in early May.
Canadian industry leaders argue the tax policies cited by U.S. officials are similar to exemptions already used by American growers.
Despite tighter supplies, U.S. wheat exports continue trending higher as international buyers seek consistent quality and reliable service.
Higher placements lifted feedlot inventories, but slower marketings point to continued tightness in finished cattle movement.
Tight cattle supplies should keep beef prices supported, while dairy, pork, and poultry are poised for greater production growth.
