Nov. 29 2013 06:00 AM

How does $10 per hundredweight income over feed cost sound?

Even among other dairy market forecasters, predictions by marketing consultant Jerry Dryer are known for having a strong track record of accuracy. That's why milk producers should find one of his recent public statements – the headline above – so encouraging.

It's been a long and hard struggle to crawl out of the deep financial hole created by the dairy disaster of 2008-09. But dairy owners should make some serious progress in 2014, thanks to lower feed costs and higher income over feed cost margins that Dryer thinks will be around $10 per hundredweight all year.

"Margins are looking far better than they did a year ago and will probably continue to improve," he said at the recent annual meeting of Idaho Dairymen's Association in Boise. His predictions are $10.25 in quarter one, $9.75 in quarter two, $10.30 in quarter three, and $10.30 in quarter four.

He expects only a modest – 1.5 to 2.0 percent – increase in milk production, because high feed and slaughter cow prices have encouraged a lot more culling this year, not just of milking animals but of potential replacements, too. Forage quality problems in many parts of the country are another reason, and Dryer thinks many producers have become "gun shy" in recent years about risk-taking.

Each month, Dryer does a monthly price forecast survey of five leading dairy economists and then averages them together. The most recent forecast averages for all of 2014 are $16.58 for Class III and $17.92 for Class IV.

But those prices may be conservative.

"I put this together for milk producers and milk buyers, and the only caveat I give milk buyers right now is that if there's any risk it is to the upside; these numbers could be low," he said.
Dennis blog footer
The author has served large Western dairy readers for the past 36 years and manages Hoard's WEST, a publication written specifically for Western herds. He is a graduate of Cal Poly-San Luis Obispo, majored in journalism and is known as a Western dairying specialist.