Professor Bob Cropp’s July 2016 Dairy Situation & Outlook full report is now available for download at UW Understanding Dairy Markets. Also, for a video podcast including Dr. Bob Cropp and Dr. Mark Stephenson discussing the Dairy Situation & Outlook, please visit Program on Dairy Markets & Policy.
Milk production continues to increase with an overall June increase of 1.5% year over year (YOY). Some of the major producing states had some amazing increases (are they subject to revision?). Quoting from Prof. Cropp:
…..New York’s [milk] production was 4.2% higher than a year ago and Michigan 5.4% higher. In the Midwest production was up 2.0% in Iowa, 2.1% in Minnesota, 3.8% in Wisconsin and 6.6% in South Dakota. In the West California’s production for the past 17 months has been running more than 2% lower than the year before. But, June’s production was just 1.0% lower…..
Reflecting the concern for the price impacts of this increased production Prof. Cropp concludes:
So there is now much uncertainty whether milk prices will end up as dairy futures is now showing. But, I do believe Class III and Class IV staying at least in the $15s for the remainder of the year is very possible. If so the Class III would average around $14.50 for the year compared to $15.80 last year and $22.34 in 2014. The Class IV price would average around $14.45 for the year compared to $14.35 last year and $22.09 in 2014. USDA is still forecasting prices lower than this with Class III in the $13.90 to $14.20 range and Class IV in the $13.80 to $14.20 range.