Current high feed costs and lower milk prices have greatly reduced returns over feed costs. This, along with very favorable slaughter cow prices, would lead one to one expect that the increase in cow numbers will stop. But perhaps the current proposed dairy policy for the 2012 Farm Bill that gives producers the option of receiving, at no cost, margin protection (returns over feed cost) of $4 on 80 percent of their highest annual milk production for the three years prior to implementation is encouraging some producers to maintain or even increase milk production.
Finally, how weather impacts milk per cow and crops this summer will be a key factor impacting feed cost, milk production, and milk prices this fall and next winter.
Bob Cropp is professor emeritus and dairy marketing specialist at the University of Wisconsin.