Dairy Market Snapshot
Milk producers are cautiously optimistic as milk futures suggest stable, slightly profitable returns in 2020. However, seasonal adjustments to milk prices are weighing on producer sentiment. From Dec. 1 to Dec. 27 spring Class III milk futures decreased from $19 per cwt to $17 per cwt. While a $2 per cwt drop in price is pessimistic, all 2020 Class III contracts are trading within a $0.60 range. Class IV futures contracts are more optimistic as futures climb from around $17 in January 2020 to a high of $18.25 per cwt in September 2020.
Nationally, milk production increased 0.9%. In Idaho, Oregon and Washington specifically, November production was up 2.2% year over year with an additional 21,000 head and a modest 2 pounds per head production growth over this time last year. Milk processors will provide headwinds to herd and production expansion in 2020.
Processors are more actively managing the balance of milk supply with regional processing capacity. When milk supply exceeds pr