During the last decade, the U.S. dairy industry has seen both butterfat prices and protein prices drive farm gate milk checks. As Hoard’s Dairyman managing editor, Corey Geiger, described it during the December 9 Hoard’s Dairyman DairyLivestream, the value of butterfat and protein to producer paychecks have been analogous to race cars on a racetrack with one speeding ahead of the other in value. That begs the question – which will impact take-home pay more next year.

“During the previous four years, not including 2019, we had butterfat as the star,” explained the University of Wisconsin-Madison’s Mark Stephenson during the webcast sponsored by Diamond V. “It was making up approximately two-thirds of the milk check for producers that were paid on component basis,” he continued, responding to Geiger’s earlier analogy.

“Then we had the big switch over in 2019 and certainly 2020. Now, you have protein being two-thirds of the milk check and butter most of the other third,” Stephenson continued.

Moving forward, the seasoned economist expects the value of the two to return to more even weightings. That being said, he anticipates protein will continue to drive prices in the coming year.

“I have protein leading the pack for next year to the tune of $2.80 to $2.90 for an average for the year and butterfat just shy of that at the $2 mark. I’m in line with you, Mark,” echoed Agri-Mark’s Catherine de Ronde of Stephenson’s comments, putting numbers to their thoughts.

An ongoing series of events
The next DairyLivestream broadcast will be on Wednesday, January 6. 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 events.

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(c) Hoard's Dairyman Intel 2020
December 14, 2020
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