There could be tighter dairy margins this year

Dairy operators will likely be feeling the pressure on margins this year.

Most milk and dairy products have already started to decline quicker than USDA had expected. They are projecting milk output this year to grow by less than one percent.

The chair of the Outlook Board says it is due to increases in production along with weak demand, coupled with strong international competition. The average milk price will likely drop by about 15 percent.

“So with that reduction, and then milk price, and really no corresponding reduction in the price of feed, if anything, maybe some upward pressure, that will potentially squeeze those margins to the point where the dairy program could start to pay out,” said Mark Jekanowski.

As a reminder, USDA has extended the deadline for producers to enroll in the Dairy Margin Coverage Program until next Tuesday, January 31st. The last payout was back in September.

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