Northwest FCS Dairy Market Snapshot

’m KayDee Gilkey with the Northwest Farm and Ranch Report.

Today we will review Northwest Farm Credit Services quarterly Market Snapshot for the dairy industry. Northwest FCS Vice President of Market Research and Development Michael Stolp shares more from their fourth quarter 2012 results of their dairy Market Snapshot.

Stolp: “Northwest dairy producers are cautiously optimistic entering 2013. After enduring a year of rising feed prices and thin profit margins, Idaho producers generally experienced a profitable 2012. Returns in Washington are more variable, including profits and losses. Although feed prices have moderated from earlier highs, increased milk production remains a drag on milk prices. Milk prices in 2013 will be significantly influenced by milk production and prevailing export demand. Lower milk prices could encourage culling as producers manage margins. Economic uncertainty across the globe may negatively impact dairy exports in the coming year.”

The snapshot provides some additional commentary:

Northwest FCS’ assessment of producers’ third quarter financial statements reveal differences between Washington and Idaho. A regional accounting firm’s analysis echoes Northwest FCS’ observations, reporting that on average Idaho producers made $.14 per cwt, while Washington and Oregon producers lost $.55 per cwt during the first half of 2012. Stronger fourth quarter returns are expected to improve Idaho and Washington producers’ overall returns for the year.

A mild winter has supported continued strong U.S. milk production.