Milk prices have staged a significant rebound from the lows set on January 23. The June Class III futures bottomed at $10.68 per hundred weight and rallied nearly $10 to a high of $20.75 on June 10. Bryan Doherty with Total Farm Marketing says the market put in a V-bottom in response to several factors, including a resurgence in demand.
He says
Milk prices were devastated during the COVID-19 pandemic with the severe demand hit resulting from stay at home orders and especially the shutdown of restaurants and schools. June Class III fluid milk prices dropped $18.02 per hundred weight on January 23 to $10.68 on April 22 when the futures established a low.
The surge in cheese demand is also a major factor especially with more families cooking at home.
A big question is whether milk prices will stay strong as the economy continues to open and demand returns to normal. Doherty says regardless the market is offering profits that producers should lock in.
Doherty says there is a concern about a second wave of COVID hitting the U.S. and globally which would shut the economy back down. So, he advises using the futures as protection and risk management in this continued volatile market.
