Key Takeaways:
While milk prices have improved from last month, Class III futures remain below $17/cwt in February and March. Luckily, feed costs have declined substantially, with corn and soybean meal futures edging toward life of contract lows in some months this week. Current futures show that lower feed costs and improved milk prices, especially in the second half of 2024, should lead to improved IOFC this year.
With the U.S. dairy heifer inventory at the lowest level since 2004, news of higher prices for heifers, springers, and fresh cows is becoming more common. Producers will have a much harder time filling their barns this year if they are short on heifers, and expansions will likely be limited. To top it off, the beef cattle herd is facing low inventory levels as well and will likely compete for the dairy pipeline.
Despite cattle inventories being short and milk production tightening around the world, milk prices aren’t off to the races. Demand for key dairy products, like cheese and nonfat dry milk, appears to be lacking. Before prices can move up further, domestic or international demand must pick up. If demand does improve, prices may increase rather quickly.
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