Could Higher Dairy Prices Be On The Horizon For Producers?

When it comes to milk production, numbers continue to increase across much of the United States.

“We continue the trend of California being down three percent, and that’s just on the heels of that ongoing pressure from HPAI," said Mike North, principal at Ever.ag.  "The bottom line is they’re coming out of the hole, but it’s not going to be a fast process. So, there’s lower milk production in California, but when you look elsewhere, producers in the near West, those states that run from I-29 through the Texas Panhandle, we’re continuing to see some ongoing growth there as new plants come online. We’re not just looking at this as a regional but a national trend. We grew 15,000 more cows and now 62,000 year-over-year growing the herd, and that ultimately is just a reflection of high prices bringing cows back in.”

Could higher milk prices be on the horizon?

“The reality of bringing back higher prices is going to mean two things. Number one is we’re going to have to shorten up supply," North said.  "We’re continuing to ramp up more and more production, and we have the cows to do it. So, as we talk about cheese production, the amount of new facilities that are coming online right now is such that, by the end of the year, we’re going to have 360 million pounds of cheese that do not have a home. So, we have to grow exports or domestic demand exponentially greater to get ahead of that supply curve and elevate prices to higher levels.” 

The second big challenge, North noted, is tariffs.

“What will Mexico do? How will they respond? We’re already seeing pressure out of Canada. Anything that was covered under USMCA is still flying through and doing okay. Canada’s ready and willing to throw more tariffs at us on any and all egg products. That was their immediate response when these went live back in March.”

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