Rod Hissong tries to look at things with a positive attitude. And while it’s tempting to be optimistic going into 2013, he has to admit there are a number of unknowns.
The No. 1 unknown is the weather.
“There are some bullish things and there are some bearish things, and I think it depends on the weather,” he says. “I don’t think any of us can guess what Mother Nature is going to do.”
If there’s another dry year, which would keep feed costs high and limit milk-production increases, then milk prices are likely to go up, Hissong says. If there is good weather and a bumper crop, which would encourage milk production, then milk prices are likely to be tempered.
For Hissong, dairy producer from Mercersburg, Pa., and former president of the Professional Dairy Managers of Pennsylvania, having a positive attitude is a plus. But it has to be balanced with a healthy dose of realism and an ability to deal with the unknown. That led him to work with a professional risk-management and commodity firm to lock in prices for his feedstuffs, which served him well in 2012.
Hissong is right. Weather is the big unknown going into the New Year. As an article on page 17 of this issue points out, even the weather experts don’t know what to expect more than a few months out. When you get March and beyond, “our crystal ball isn’t that good,” Jed Lafferty, managing director of life sciences for Planalytics, told a webinar audience on Dec. 12.
Acknowledging the uncertain weather, we went ahead and asked a group of experts to share some of their ideas on what the New Year could bring in terms of crop prices and dairy prices. In making their predictions, these experts assume that the weather will be a bit more “normal” this year than it was in 2012.
Only time will tell whether that was a good assumption or not.
Dairy Outlook: All-milk price could average $20
By Bob Cropp
As we enter 2013, there is considerable uncertainty where milk prices are headed, especially for the last half of the year.
This uncertainty is evident as we look at what happened in 2012. The widespread drought of 2012 resulted in high feed prices. High feed prices made for unfavorable margins (returns over feed costs) that resulted in less milk being produced, but much higher milk prices for the last half of the year than what had been earlier forecast. The year ended with two-thirds of the U.S. still under drought conditions.
One uncertainty impacting milk prices in 2013 is moisture. Adequate moisture next spring and summer will be needed for good crops in 2013. If adequate moisture materializes, feed prices will fall, improving margins for dairy producers, and this would be positive for milk production.