While current Class III milk futures are not offering “excellent” marketing opportunities, the dollar-plus rally from last month low has been impressive, says analyst Mike North from Commodity Risk Management Group. In both of the last two years, Class III futures were well under current levels. Export demand has been a bright spot for U.S. dairy products this winter after a very dry winter in New Zealand cut supplies coming from that dairy-exporting powerhouse.
North explained to AgriTalk After the Bell host Chip Flory that milk prices are normally under pressure at this time of the year as production spikes with the “spring flush.” This year, production is up, but demand has been strong enough to tug prices higher. North also sees higher production in the weeks ahead with bigger-than-expected cow numbers and cow productivity continuing to climb. As a result, he said that even in the face of less-than-excellent marketing opportunities, some downside price protection is needed for dairy producers.