Dairy Market Outlook

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Dairy Market Outlook

• Great Plains and Midwest Outlook Conference
• Kansas City
• August 15, 2006
• David P. Anderson
• Associate Professor and
• Extension Economist
• Livestock and Food Products Marketing

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Overview

• Supply
• Expansion
• Prices
• Trade
• Policy
• Near Term Conditions
• Price Outlook

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Supply
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Expansion
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Top 10 Texas Dairy CountiesMilk Production
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Supply

• Large Growth Over 18 Months
• Profits
• New cows online, fresher
• Good weather
• Short Term
• HOT!!!
• Feed quality issues, hay costs
• Poor breeding back
• Increased Cow Slaughter

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Supply

• Diverging Industry
• Large expansion continues
• Small producers declining
• Slowing Production
• May even decline, near term
• But, ample supplies
• Modest Growth Next Year

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Prices
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Prices

• Weak
• Not Enough to Cause Rapid Liquidation
• More like holding or slowing
• Expansion Continues for Large Dairies
• But, high hauling costs
• Increased Components
• Nutrition, breeding

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Policy

• Make Allowance Ruling
• Still waiting
• Reduced pressure on processors
• Lower producer prices
• Issues between proprietary firms and coops
• Choices
• Dairy Price Support Program
• MILC
• DPSP helps large producers more
• MILC helps small producers more
• Fight will continue

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Near Term Conditions
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Market Summary

• Moderating Production Growth
• Cows and production per cow
• Some Buildup of Private Stocks
• Stagnate Prices

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Projected Prices for 2005-2007
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