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DAIRY GROUPS EXPLAIN RECORD HIGH PRICES, PROVIDE OUTLOOK
Source: Dairy Management Inc. and National Milk Producers Federation

Many key milk and dairy product prices continued to set records in April.

And while the dairy futures markets indicate that prices will soon ease back from these levels, the futures have been moderating their assessment of how far prices will adjust downward.

Futures markets currently indicate that milk prices will plateau for much of the second half of 2014 at about the highest level they had ever reached prior to this year.

This extraordinary price performance is the result of markets continuing to show increased dairy product sales in the domestic market, strong export shipments, moderate to little increased milk and dairy product production and significant drawdown of domestic dairy product inventories.

Markets had previously anticipated swifter and sharper reactions, on both the demand and supply sides. This has not occurred as expected, giving longer legs to the current dairy price situation and outlook.

A concurrent general decline in the cost of dairy feed is resulting in very favorable milk price margins over feed costs. Current milk price-feed cost margins, as measured by the 2014 farm bill margin formula, will not reach record levels this year, but they will generally rival the only other extended episode of extraordinarily high margins, when this indicator established its current record, in the second half of 2007.

To read the entire report click here.


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