Dairy Prices Holding Steady

Dairy producers saw record profits last year, but prices are down this year.

"The 2015 dairy markets are about as steady as I've ever seen," says University of Missouri Extension agricultural economist Joe Horner. "Typically we're either shooting through the roof or going through the floor."

Horner talked about prospects for the dairy industry April 22 at the MU Spring Ag Marketing Outlook Conference.

Dairy supplies are growing, but only about 1.5 to 1.8 percent per year. Horner says he expected faster growth following last year's profits, but that hasn't happened.

"With California's drought, they are dropping in milk production, and that alone is keeping a lid on our milk production this year," he says. One out of every five gallons of milk in America comes out of California.

While domestic demand has been steady, exports have been falling, Horner says. The U.S. exported around 17 percent of its milk the past two years, but milk exports have dropped below 13 percent this year. He says the slowing economies in China and the Middle East coupled with the rising dollar make it difficult to compete against other major exporters.

With the drop in on-farm prices, consumers are paying less for milk at the grocery store. Horner expects that to continue.

"Unless we see a drought situation develop later this year in the Midwest or the eastern half of the U.S. like there is in the West, I would expect feed prices to come down and milk prices to be pretty steady," Horner says.

Presentation slides from the conference are available.

Source: University of Missouri Extension