Heat is last straw for US milk production

Especially the demand for cheese from Mexico seems to have decreased considerably, as a result of the higher tariffs on American products. It looks like European products will fill the gap. This means that the American dairy sector must look for other buyers. And that is something that may work, but which the American dairy farmer was not expecting. 

Major write-down on futures market
For the first time in months, one beckoned increasing milk price to the livestock farmers. This has been completely wiped out by the higher tariffs on products to Mexico and the US, which came into effect in the first week of July. The futures market underlines this and puts the difference between the May 30 market and the mid-July market at $380 million. While the trade war cannot explain the complete loss, the market would have been better off without it.

Financially and economically it is a blow to dairy farmers. As a result, the supply of cows for slaughter is gradually increasing and sales are increasing. Although this did not yet result in less milk in the first half of 2018, the point is that fewer cattle can no longer be absorbed by more milk. 

Heat and high humidity
The weather is also not helping to keep volumes up. The heat, in combination with high humidity, puts pressure on production. The proof of that is that in the Midwest there are The United States another plus on the Class III milk price is paid. That last happened in March.

The question now is whether the shrinking volume can compensate for a possible drop in demand. And that is good news for the European Union (EU). This could prevent the US from offering heavy discounts on the markets where the EU is active.