Are we headed for record milk prices?

After peaking at 9.4 million head of dairy cows in January 2018, dairy cow numbers have slid by 120,000 head over the past 20 months. This in turn has caused the annual growth rate of U.S. milk production to fall below 1 percent for both 2018 and 2019. That’s after posting an average annual growth rate of 1.7 percent during the 2014 to 2017 time period.

The recent decline in dairy cow numbers is only about one half of the decline the dairy industry experienced over a 12-month time span beginning in late 2008. The slowdown in milk production is one of the primary factors that has allowed farm-level milk prices to improve over the past seven consecutive months to reach $18.90 per hundredweight.

A moving milk price