Outstanding profit margins that dairy producers have enjoyed so far this year have begun to fray around the edges. It's a pattern uncomfortably similar to what was seen in 2007, so keep your eyes on it.
Weaker cheese prices are part of what's happening. On April 4, announced Class III milk prices for the first three months of 2015, plus closing futures prices for the next nine months, averaged a record $21.13 per hundredweight. By April 14, the average had eased back to $20.71.
Feed prices are a bigger concern. Political tension in Ukraine and drought in Brazil, both major global grain exporters, have been driving corn, soybean and wheat prices higher all year so far.
Back in mid-January, corn prices at the NASDAQ stock exchange bottomed out at about $4.20 per bushel, soybeans at $12.50, and wheat at $5.60.
Since then, all three have seen increases of approximately 20 percent. By last Monday, corn had been over $5 several times, soybeans were just under $15, and wheat had been over $7.
Pay attention to crude oil prices, too. They were just under $92 per barrel in mid-January, but were up to almost $104 last week.
Higher prices for all four commodities point to higher milk production costs the rest of the year, so the message is don't let your guard down; a lot of the year is still left to go.
