2022 record dairy prices were short-lived

Stagnant milk production growth last year helped push dairy prices to record highs and they’ve been freefalling since.

USDA’s Annual Summary of Milk Production, Disposition, and Income this week showed only a 0.1 percent increase in milk production in 2022, while farmer earnings increased by 37 percent to an average of $25.39 per hundredweight.

Senior dairy analyst Lucas Fuess with RaboResearch tells Brownfield milk prices since last year have dropped significantly.

“Class III has a $16 handle in front of it for the month of May—extremely unprofitable I think for every dairy farmer in the country with the cost of production up in the $20 to $21 range,” he says.

The dairy herd overall declined by 47,000 head, while cows became more productive, growing per cow production by nearly 140 pounds.

Fuess says there has been steady herd growth in the past few months.

“Herd size growth, as reported by USDA, comes as margins are tightening, as profitability is not there, we’ve seen weekly and monthly slaughter rates at higher than prior year levels so that suggests farmers are culling cows,” he explains.

Fuess says most of the increase is coming from South Dakota, Kansas, and Texas because of processing expansions, and incremental cheese plant growth across the country has been able to absorb additional milk. 

“We’re really flat versus two years ago, I think ultimately this is pretty good news for anticipated price recovery in the back half of the year,” he says.

Unfortunately, Fuess says high feed, labor, and other input costs are likely to keep margins under pressure in 2023.

USDA says farmers in Florida, Oregon, Georgia, and South Carolina saw the highest milk price in 2022, all above $28 per hundredweight, while New Mexico, Kansas, and Iowa, had the lowest average price.

Add Comment

Your email address will not be published.


Stay Up to Date

Subscribe for our newsletter today and receive relevant news straight to your inbox!

Brownfield Ag News