Knowledge Exchange

Ag Economy

Dairy

Milk prices bottomed out for many producers in February 2018, dropping below $15/cwt. Since then, prices have modestly improved, and are projected to further increase somewhat through 2019. Milk price (Boston Blend), ended 2018 at $16.27/cwt in December. It has since climbed to $17.31, and is forecast to reach $18.30 by the end of 2019.

Price per cwt. 2016 2017 2018 2019 Forecast
Boston Blend Price1 15.90 17.44 16.09 17.74
Avg. WNY Blend2 14.84 16.40 15.06 17.08
  • U.S. milk production grew by only 0.2 percent year-over-year in February, due to increased production per cow. There were gains in California (0.1%), Idaho (2.1%), Texas (7.7%), New York (2.8%), and Wisconsin (1.5%), and reductions in Pennsylvania (-6.0%) New Mexico (-3.9%), and other states.
  • National cow numbers decreased year-over-year (-77,000 head). New York had an increase of 2,000 head from last year, at 627,000.3
  • Despite ongoing trade issues, U.S. dairy exports remain remarkably strong. Overall total US dairy exports set a record by volume (but not by value, due to lower prices) in 2018. Exports were led by very strong buying of powder by Mexico, but partially offset by a large decrease in imports by China. Exports to China were the lowest in two years, in response to new tariffs.4 January 2019 export volume fell by nine percent from January 2018, in large part due to a 41 percent decline in shipments to China.
  • With the passage of the new farm bill, improved risk management tools will be available to producers. The Dairy Margin Coverage (DMC) program, available through the USDA Farm Service Agency, represents the new version of the Margin Protection Program (MPP) which is expected to be available for sign up in June. Margin coverage will be available up to $9.50/cwt, and premiums for the first five million pounds of production have been substantially reduced. From the Risk Management Agency, LGM is now joined by the Dairy Revenue Protection program (DRP). The DRP provides protection against an unexpected decline in milk revenues. Additionally, producers can now participate in both DMC and LGM or DRP at the same time. Sales are currently ongoing for the DRP program through Crop Growers.
  • Recent threats by the Trump administration to close the US-Mexico border have caused concern. Mexico represents the largest customer for U.S. dairy exports, making up about 25 percent of the total.
  • Despite strong exports and domestic demand for processed dairy products, issues continue regarding milk marketing arrangements. Some farms have either lost markets or are concerned that they will lose markets for their milk due to ongoing supply adjustments by processors and handlers. 

1 Agrimark Price Forecast
2 Upstate Niagara Price Forecast
3 USDA/NASS
4 U.S. Dairy Export Council