U.S. dairy producers have been riding the wave of higher milk markets, but can that be sustained into 2015? Matt Mattke, Dairy Market Analyst with Stewart Peterson says milk prices have been above $20 per hundred weight for over a year now and the U.S. all-milk price just hit a record of $25 in September. He says the record high prices for cheese and butter have been the driver.
However, since September 26 cheese and butter prices have dropped sharply and that will pull down milk prices. Mattke says that slippery slope is likely to continue into 2015.
He says the bearishness in milk futures is tied to the expectation for cow numbers and production to expand. In 2014 that was kept in check partially as dairy producers sold cull cows to take advantage of the high beef market. However, he’s not sure that will continue, plus there is uncertainty about global dairy demand.