Market Reports

Most dairy markets bounced back this week. There is still more milk than the market needs but for myriad reasons, the excess has become a little less burdensome. The markets are working.

These milk prices will not pay the bills, and dairy producers are likely cutting milk production accordingly. In some regions, co-op penalties will accelerate contraction. These incentives were largely absent in March when the spring flush arrived and explains why so much milk was dumped in late March and early April as the industry struggled to adjust to the impacts of Covid-19.

We are in the darkest days of this crisis. Consumers are hunkered down and demand has cratered. Processors are piling up product, milk is gushing, and the spring flush is likely to overwhelm the market for another two months.

The novel coronavirus has strangled foodservice and export channels, and the industry simply has more milk than it can handle. With so much lost demand, the dairy industry must cut production. The market is laboring ruthlessly to make that happen.

The retail surge has petered out. Consumers are still standing in the grocery checkout line with more dairy in their cart but the industry cannot make up for lost foodservice demand and throttled exports.

Those numbers clearly won’t pay the bills, and after four painful years (and a couple good months) dairy producers are in no shape to weather this storm.