Dairy Market Reaction Causes Headaches and Heartaches for Farmers

Dairy Market Trends 042420
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Clinton Griffiths - Naomi Bloom with Total Farm Marketing is our guest today. Naomi, as we look at the dairy industry over the last couple of months, we've seen some really staggering drops not only in demand, but in our prices. Where do we sit right now as an industry? 

Naomi Bloom - Well, overall, we've got prices near that $11 area for many contract months. So, we're at the lowest levels that we've seen, quite frankly, since 2001 to 2003. This is a price point that is heartbreaking for so many producers. They're working on their best efforts to, if they can, cut back on production. So that either means they're culling cattle or they are doing nutrition a little bit differently or they are maybe trying to dry up some of their cows earlier than they normally would to try to ease that production. 

But overall, it's a situation where the demand just, of course, isn't there because of the restaurant industry demand loss, even though the consumers are doing their best to buy at the retail level, unfortunately, it's not quite enough. And as far as our export market goes, we’re actually stronger than where we were a year ago for the January and February months for exports. But of course, in the past few weeks, exports have not been where they've been and it's because the dollar is so high. So, we need that dollar to come down. And, of course, demand to pick up from the restaurants and just get the economy opening up again would, of course, be the most helpful. 

Clinton Griffiths - It's that time of year where we see the spring flush and we see more production come on line. We do know some producers out there are having to try to cull some cows and maybe try to pull that production down quickly if they can. But the price of cull cows isn't great. 

Naomi Bloom - Well, exactly. It’s not fantastic and then you also have the other issue that some of these packing plants are closing up. And so even if you want to do that, you're not able to because you just don't have the physical space where you are able to do that. So, it's a headache, it's a heartache and hopefully, you know, give it two or three weeks. Some things start to ease up as far as restrictions. We can get these packing plants back online. We can get more of the economy moving so that way we can get the milk and the milk products that go to restaurant or to the big industry back in place, but I don't see any immediate things that are going to make the milk price turnaround and go higher. But I will say it does feel like we've priced in most of the negative news and hopefully we're finding our bottom.