Robin Schmahl

Robin Schmahl is a commodity broker and owner of AgDairy LLC, a full-service commodity brokerage firm located in Elkhart Lake, Wisconsin. He can be reached at 877-256-3253 or through their Web site at www.agdairy.com.

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The U.S. dairy herd is at the highest level since August 2021 as farmers continue to hold onto cattle, reducing culling. The USDA made a large revision to cattle numbers on the May Milk Production report.
Higher cheese and butter production has not moved supplies above year-earlier levels. Increased milk production is being absorbed domestically and internationally.
The butter price has the potential to increase as fundamentals become supportive. Higher milk production will require increased demand to maintain or improve milk prices.
Class III milk futures surged early this month, driven by rising cheese prices and a shift in market sentiment that replaced discounts with a seasonal premium.
Butterfat exports are running at more than double the pace compared to the past two years
Tariffs have been dominating the news, and the uncertainty of the impact of those tariffs on dairy export demand. The strong exports of butterfat and the difference between the world price and the U.S. price may minimize the impact for that category.
Heifer supplies are tight, but cow numbers continue to increase and are substantially higher than a year ago. High heifer prices and a tight supply have resulted in farmers holding on to more cows.
There is no doubt there will be significant volatility this year. Politics, equity markets, weather, supply, and demand will all affect the markets
Dairy prices have been under pressure from lower demand and future demand uncertainty. Tariffs have cast a bearish cloud over the market. The first lab-grown milk without a cow has been successfully produced.
Dry whey and nonfat dry milk prices are under pressure. This is having a significant impact on the potential for milk prices.
Heifer prices have been increasing as the supply tightens. The main reason is the desire to breed beef-on-dairy to supplement income. The January Cattle Inventory report showed the lowest heifer-to-milk cow ratio recorded for the January report.
Volatility in futures is one thing but volatility in the spot market is another. The volatility in the futures market is difficult to predict, but volatility in the spot market makes it impossible to predict.
Looking back on the past year, we see price improvements in all categories.
Continued lower milk production could significantly change the fundamental outlook of the market. However, the current milk supply is sufficient, leaving buyers comfortable with the current supplies. Dairy cattle slaughter continues to decline.
The USDA released their ten-year baseline projections showing growth in all categories.