Dairy Reports

Average U.S. mailbox milk prices have dropped more than $6.00/cwt since peaking last May. While milk supply here and in Europe has been edging marginally higher since late 2022, we would argue that the price decline is largely due to broader economic factors that are limiting dairy demand both in the U.S. and abroad. 

Federal Milk Marketing Orders establish the minimum prices that regulated processors must pay for farm milk. 

Prices for retail butter are outpacing nearly all other goods — up 13% YTD according to the Bureau of Labor Statistics — and the worry about its impact on demand is legitimate. 

The U.S. is one of the world leaders in whey production and exports. Technological advances have created new value streams beyond commodity whey. In the last 20 years, whey has been transformed from a cheese-making waste byproduct often spread on farm fields as a low-value fertilizer to a highly valuable co-product, driven by rising global consumer demand for protein.

Over the past decade, U.S. milk production has increased by an average annual growth rate of 1.5% while domestic demand has increased at a slightly slower pace.

The U.S. Dollar Index saw rapid deflation in 2020 and has coincided with a rally in commodity prices. 

The pandemic in 2020 caused unprecedented market volatility in dairy prices, leading to lower milk checks for dairy producers. However, the price spread is expected to realign in the first half of 2021, bringing normalcy to producer price differentials and mailbox milk prices.

California’s 1.4 million dairy cows are the largest source of methane in the state, and the biggest concentration of dairy-related methane in the country.