Slowing milk production, combined with a robust gain in demand, is supporting a buoyant outlook for U.S. milk prices in commodity markets.
U.S. milk production growth slowed to a crawl in July; meanwhile, total commercial use of milk in all products showed one its strongest gains of recent months. Increased domestic use more than offset a double-digit percentage drop in total export volume in July. This additional demand, combined with flat production, is drawing down stocks of the major dairy products. That may make July the year’s low for milk prices, according to dairy futures, as milk prices add more than four dollars per hundredweight during the following three months. Strong increases in cheese and Class III prices in August signal the start of this milk price recovery.
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