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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Buyers of dairy products on the spot market have not been aggressive in 2023. They see plentiful supplies and no indication of that changing anytime soon. Here’s what that could spell in terms of milk prices.
Even though there are reasons why it seems milk futures should not be declining as much as they have, traders are anticipating milk prices based on the current domestic and international fundamentals.
One never knows when milk prices have reached their peak. Many tend to wait until underlying cash shows weakness before taking a serous look at the market. However, many times some opportunity has already been lost.
The recent decline of butter price has been a surprise. But there have been other years of substantial price weakness for various reasons.
The end of the year generally brings slower demand, and this year may be impacted more than usual due to higher food prices.
Wide price swings have become more frequent over the past year. These price swings have taken place over short durations as market participants have been quick to enter and exit positions.
With the uncertainty over milk prices and input prices, it becomes necessary to establish price floors for milk and price ceilings for feed. Not doing anything is making the decision to leave your whole farm at risk.
It certainly has not seemed like there’s been a seasonality to cheese prices this year, but price movement shows otherwise. However, milk futures have not reflected that due to an overall bearishness in the market.
Many farmers have not developed a marketing plan to protect milk prices. This leaves the farm open to risk and the possibility of significant financial loss which could put the farming operation in jeopardy.
Slower domestic demand is being offset with higher international demand, but that is still not enough to support prices and turn the trend higher.
Cheese and butter prices continue to hold a large price difference with butter around $1.00 higher than cheese. One reason for this is the substantial difference in inventory levels between cheese and butter.
Dairying in Israel is unique in that both large and small farms embrace technology and innovation.
Food prices have risen substantially causing consumers to look for ways to stretch their dollar. Dairy products will remain an integral part of the diet, but the volume of purchases might be reduced.
Even with strong export demand and overall domestic demand holding well, there is still too much cheese.
Factors influencing the markets have changed over the years which has had an impact on market seasonality.