Milk prices have remained much more consistent in 2021 compared to 2020, but will that last during the summer months? Clinton Griffiths sits down with Mike North of Ever.ag to discuss dairy markets going into the warmer months.
“Milk production around the country continues to improve, and as you watch the milk production reports, year-over-year gains are still very solid, albeit not running at the wide-open pace that we saw last fall,” North says. “Growth has been metered a little bit more. We’re back into that 1.8% to 2.1% range of sorts in the last couple of months versus the 3% growth we saw last fall.”
“We’ve certainly got a lot of things going on by way of demand. If you look at the product categories, the whey market is on fire. Whey prices today are right in that neighborhood of about 66 cents per pound. And if you go back to the beginning of the futures contracts, we are rubbing up against record highs for whey prices. Albeit if you go back to 2007, we did see whey prices move higher and that helped drive that 2007-2008 milk price rally, that has in fact been helpful in the last three milk market, which along with some lingering final purchases from the Farmers to Family Food Box Program, some prep for the grilling season and a little bit of a push on the retail side of things. Ultimately, we’ve seen Class III prices rise and have a lot of fantastic opportunities out in the fall and even into 2022.”
“If you look at butter and powder, which are the main drivers behind the Class IV market, that powder market’s been red hot. And as you look at the world complex, China continues to buy powder at an amazing pace as well as others who are right in behind them grabbing volumes. And that’s driven our powder market back up to a level of $1.30-$1.35, numbers we haven’t seen in quite some time. Butter is kind of hanging out in this $1.75 zone, which is very strong. But there’s a real shot we could be seeing $2 butter as we move towards summer again as demand remains very, very strong.”
“We do have a little bit of concern on the retail side. We’re starting to see butter back off a little bit. But as restaurants reopen and people get back out into their dining out schedules again, we’re hopeful that some of that fat that we count on being consumed in the restaurants gets pulled up into the supply chain and offset some of the softer retail demand.”
