COLUMBUS, Ohio — Depending on whom is asked, most dairy experts say things are either stable or slightly looking up in their industry. Others say there are obstacles in this business that give them headaches.

The price for milk is a gauge for many. As of now, those prices are favorable to milk producers throughout the Midwest.

“May milk prices will be the highest thus far this year,” said Bob Cropp, professor emeritus at University of Wisconsin-Madison. “The May Class III price will be near $16.20, compared to $15.81 for April, and the Class IV price will be near $14, compared to $13.51 for April.”

According to Cropp, slower than anticipated increase in milk production, good domestic sales of cheese and butter and some improvement in dairy exports are the reasons for higher milk prices.

“With record milk prices last year and lower feed costs predictions at the beginning of the year, the prediction was for milk production to run well over 2 percent higher than the year before. But this has not occurred,” he said. “USDA’s milk production report estimated April milk production for the U.S. to be just 1.7 percent higher than last year. Milk production during the January through April period was just 1.8 percent higher than a year ago.”

According to Cropp, in March the U.S. dairy export volumes reached their highest levels in nine months. Overall volume improved from February, though sales were below year-ago levels. Nonfat dry milk and skim milk powder exports were 7 percent higher than a year ago.

“Compared to a year ago, cheese exports were 5 percent lower, total whey exports 16 percent lower and butterfat exports 79 percent lower,” he added.

According to the U.S. Dairy Assoc., May milk cow numbers increased 1,000 head from March, after decreasing by 2,000 head from February to March. Compared to April of last year, cow numbers were 65,000 higher and milk per cow 1 percent higher – resulting in the 1.7 percent increase in total milk production.

“There is uncertainty as to where milk prices are headed for the remainder of the year,” Cropp explained. “Dairy futures have prices to continue to show strength. Class III futures are in the $17s by September and for the remainder of the year. There is a concern that buyers of cheese have been building inventory and will not be as active in purchases going into summer and fall.”

He believes dairy exports may not improve as much as earlier anticipated and will stay below year-ago levels. Prices on the Global Dairy Trade have shown further weakness and will keep prices below U.S. prices.

“China’s milk production has improved, their economy has slowed some and it is uncertain to what extent China will become more active later this year in importing dairy products,” Cropp said. “The world milk supply may be higher than earlier anticipated, with New Zealand’s milk production now anticipated to turn out higher than earlier predicted with improved rainfall, and the quota on milk production has ended in the EU (European Union).

“The USDA is now forecasting milk production to end the year just 1.3 percent higher than last year. An increase in milk production well below 2 percent is bullish for milk prices. At this time it doesn’t appear that milk prices could either fall or increase sharply for the remainder of the year.

“Prices could still average $6 or $7 lower than the record high prices of last year. But, with lower feed prices than last year, margin returns over feed costs are still conducive to increased milk production,” he noted.

And what about the dairy prognosis for 2016?

“Changes in milk production usually lag changes in milk and feed prices,” said Kenneth Mathews, agricultural economist with the USDA in Washington, D.C. “With 2015 margins expected to be more conducive to expanding the milk supply, milk production in 2016 is projected to continue growing at a moderate rate.”

According to Mathews, milk cow numbers are forecast to average 9.335 million head in 2016, with milk per cow forecast at 22,800 pounds. Milk production is forecast at 213.6 billion pounds, a 2.1 percent increase over the 2015 forecast.

“Dairy exports are expected to grow in 2016 as demand for foreign buyers is expected to increase from 2015, but exports are not projected to reach the record highs set in 2014,” he explained.

 

COLUMBUS, Ohio — In Ohio, there are roughly 267,000 dairy cows residing on more than 2,700 dairy farms; the average herd in Ohio is 97 cows. In 2014 the state’s dairy cows produced 5.43 billion pounds, or 630 million gallons, of milk.

If this makes anyone want to run out and become a dairy farmer – well, be careful, says one Ohio dairy expert.

“Our dairy farm business summary shows there’s farms across Ohio that are doing very, very well while there’s other dairy farms that are struggling,” said Dianne Shoemaker, Ohio State University extension dairy field specialist.

One of the bigger challenges facing dairies in particular, she says, is the topic of nutrient management water quality. “Right now we’re wondering what kind of legislation will be passed regarding the handling of manure,” Shoemaker said.

“In western Ohio the dairy farmers have had to start dealing with this issue and there are restraints on when and where they can haul manure. It’s a challenge, as many farms don’t have the storage facilities to meet those restrictions. It can cost tens of thousands of dollars to build those, resulting in serious financial challenges to these dairy farms.”

Shoemaker says there’s more challenging issues facing dairy producers. “There’s challenges on the input side, with feed prices being nearly 50 percent of the total cost of operations. As the input prices fluctuate, you’re challenged by the output prices that fluctuate. You’re caught in the middle of two rocks.

“In addition, some farms are losing their milk market and finding a new home for milk can be a challenge; there’s a lot of milk around. It’s tough finding a processor that will take one’s milk. Milk is a commodity, so having to live with the price fluctuations is a high challenge,” she said.

California ranks first in dairy production in the United States, with 1.8 million head of cows producing 3,624 million pounds of milk. Wisconsin and New York rank second and third, respectively. Michigan ranks eighth while Ohio is 10th.

According to the USDA’s National Agricultural Statistics Service Ohio field office, the state produces 461 million pounds of milk. Ohio ranks first in the nation in Swiss cheese production, fifth in number of manufacturing plants and 10th in overall cheese production.

“Ohio is a great place to work because we have a very diverse dairy industry,” Shoemaker said. “There’s always challenges. It’s not simple, yet we do have multiple ways of being successful on dairy farms.

“And while there are many obstacles and challenges facing dairies across this state, I don’t see dairy disappearing from Ohio anytime soon.”