Inside: Dairy Market
US dairy farming sees income decline
Dairy farmers in the United States (US) are seeing their income gradually decline. It is an indication of the direction milk production is going to take. What's up with that?
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There are 2 main arguments for closely monitoring milk production in the US: the US is a competitor of the European Union (EU) and trends there are normally a harbinger for the EU.
The Americans are also keeping a close eye on the EU, because falling cheese prices could make the American product less interesting. At the same time, the European quotation for skimmed milk powder puts pressure on the price of Nonfat Dry Milk, the American version of skimmed milk powder.
Income is disappointing
The pressure on prices is bad news, especially now that income in dairy farming is already described as 'poor'. In the week of November 4, the number of slaughters was lower in the US. This is due to problems at a large slaughterhouse, but in the coming weeks the specialists in the dairy market will take into account an increasing supply. The increasing number of slaughters indicates a slowdown in the growth of the American milk pool, which means that the US is heading for a break in the trend.
The growth of the American milk pool shows a further acceleration in October. For example, the 23 most important milk-producing states record 7,59 million tons of milk. Nationwide, the counter amounts to 8,07 million liters, an increase of 1,4%. The size of the livestock herd shows a minimal decline, but production per cow is picking up slightly again. This while it still belongs to the lowest 3 of 2017, a signal that little additional feeding is being done.
The hits are mainly in California (-1,5%), New York (-0,1%), Oregon (-2,4%) and Washington (-0,5%). Together, the states represent 31% of the US milk pool. The number 2 in milk production, Wisconsin, managed to achieve a growth of 2,3%.
Record remains achievable
Until October, the milk collection in the US amounts to 81,73 million tons of milk, an increase of 1,5% compared to 1 year earlier. In the short term, a trend break will not have any effect and milk production is therefore heading for a new record. However, it does not mean that dairy farmers will also achieve a record in terms of income. The opposite seems to be true.
The milk supply will increase again in October.