Tightening Margins: It could be lower prices ahead for dairy farmers

Squeezed margins for dairy farmers are predicted for the second quarter. RaboResearch says prices will continue to drop over the next few months and it is likely that dairy farmers have not seen the lowest number yet.

USDA Outlook Board Chair, Mark Jekanowski says they found a surprise in the dairy cow market.

“Cow numbers, dairy cow numbers, higher than we had been forecasting so we accepted that revision in dairy cow numbers and that incorporates into a 200 million pound increase in milk supply, U.S. milk supply, year-over-year that would be up 1.2 billion pounds,” he said.

Lucas Fuess with RaboResearch believes China will help drive some global demand resurgence in the second half of the year.

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While this adjustment is substantial in percentage terms, according to David Widmar with Agricultural Economic Insights—it is part of the natural ebb and flow of the agricultural economy.