After milk prices showed some promise early in 2021, falling milk prices and higher production costs led to fewer milk cows and milk production later in the year. Like just about all of the economy, the rippling effects of the pandemic led to more uncertainty and volatility in milk markets. This year (2022) brings the opportunity for some higher milk prices.
The number of dairy cows in the U.S. hit 9.51 million head in May 2021, the most in more than 20 years. When combined with increasing production per cow, total milk production almost hit 20 billion pounds in May. Since then, milk prices have struggled and dairy cow culling has jumped up above year-ago levels. By October, the dairy herd had declined to 9.4 million, 14,000 head below last October. More important, milk production declined to below a year ago, as well.
High feed costs will continue to pressure profits this year. The relative balance of feed costs and milk prices led to 10 straight months of DMC payments (at the time of this writing) due to income falling below threshold levels. But, rising costs, other than feed costs, will pressure profits beyond what is implied by income over feed cost calculations for the DMC.
Nationally, the new year began with fewer dairy cows than last year and restrained growth in milk production. Milk prices are also expected to increase above 2021 levels based on production expectations. The U.S. All Milk price may average more than 5% above 2021.
Higher production costs, slow growth in milk production, but also good demand for dairy products hold the promise of higher milk prices this year than last.
EDITOR’S TAKE:
Predicting dairy prices and income is very tricky business. Like the old adage states – those who gaze into crystal ball will often end up eating glass! That said, we sincerely trust the predictions in this article will come to fruition. It would be wonderful to see dairy farmers receive more income for their investment and efforts. Overall, the article seems to put a bullish spin on the dairy industry in 2022. Keep a close eye on any developments that could impact dairy producers in your area. More income equals greater prospects for truck sales!
