An ag economist says US dairy farmers have experienced slow and steady improvements to prices over the last quarter and he’s optimistic it will continue.
RaboResearch’s Lucas Fuess tells Brownfield, “We do continue to see some improvement in milk prices here over the next several months and I think when we couple that with a little bit of an improvement on the feed cost side of things as well, generally improved news for US dairy farmers.”
He says cheese markets have been driving Class III gains into May with the June Class III contract rising about $4 in the past month.
“We’ve seen extremely strong cheese exports, especially into February and March,” he explains. “March was an all-time record high cheese export month for the US, which was of course great news.”
Fuess says limited milk production growth in the U.S. and abroad, as well as weaker cheddar production, has also helped boost prices.
“We’re now at multi-month highs in that cheese market,” Fuess says. “It remains to be seen where we will eventually go to if $2.00 cheese is maybe in our future here as we deal with the short squeeze. But overall pushing this Class III price up to where Class IV has been settling over the past several months is very good news overall.”
Milk production in USDA’s latest report was the 9th consecutive month of weaker year-over-year milk output.
Fuess says he expects continued demand growth, especially heading into June Dairy Month, to carry prices into higher territory.