This May’s milk production figures saw a 1.1% decline from May 2019 and were recognizably lower than April 2020. The cuts were made both in total production and production per cow. That was a reaction to production restraints and base programs that were instituted in many regions across the United States due to COVID-19.
The tables turned as the calendar flipped to June and federal programs were initiated while simultaneously supply chains reopened. As milk prices have adjusted, the question has become, “How quickly will dairy farmers turn the milk faucet back on?”
“I think it depends a little bit on what strategy you pursued if you reduced milk production on your farm,” Wisconsin’s Mark Stephenson shared during the June 24 Hoard’s Dairyman DairyLivestream.
“One thing that we do know from past experience is that if $20 milk starts showing up on milk checks with the feed prices we have now, dairy farmers will find a way to produce milk. They will definitely bring the milk back,” elaborated Cornell’s Chris Wolf.
Heifers haven’t gained value
In the last several weeks, we’ve fielded this question on multiple occasions: “So will heifer prices go up?” It’s the opinion of the DairyLivestream panel that once again it might depend on how producers cut back.
“If you pursued culling animals out of your herd or early dry-off or early retirement for some of the animals, then maybe purchasing animals is going to be a stronger urge,” Stephenson said. “If you pursued making a less energy dense ration, then maybe you don’t want or need any more cows right now. You’re going to focus on how to get the cows you have back up to speed,” he continued.
Importantly, in the case of both a rebound in milk production and an improvement in heifer prices, high milk prices would likely be necessary. As the DairyLivestream was taking place on June 24, Class III prices fell 75 cents on the day for July, August, September, and October contracts. Further volatility and worse milk prices would put a dent in milk production once again.
An ongoing series of events
DairyLivestream will air twice each month. The next broadcast will be on Thursday, July 9 at 11 a.m. CST. Each episode is designed for panelists to answer over 30 minutes of audience questions. If you haven’t joined a DairyLivestream broadcast yet, register here. Registering once registers you for all future broadcasts.