Profits Improve With Higher Milk Prices
It look like dairy producers profits are improving with higher milk prices. Northwest FCS Vice President of Market Research and Development Michael Stolp shares details from the fourth quarter results of the Dairy Market Snapshot.
Stolp: "After enduring depressed milk prices, rising feed costs and negative profit margins for much of the year dairy producers closed 2013 with strong profit margins fueled by rising milk prices, falling corn prices, and historically high U.S. dairy exports. Milk prices are expected to remain strong in 2014, but could be pressured by increased competition in global export markets. Milk production in Oceania and the EU is expected to increase. Although lower feed costs are expected to support dairy producers' profit margins, prices for soybean meal, alfalfa, and other feed ingredients remain high relative to declines in corn prices.
The Market Snapshot shares that Northwest dairy producers face a change of fortune entering 2014. High milk prices and stable feed prices support strong profit margins for most Northwest dairy producers.
Lower corn prices are driving Northwest dairy producers' feed costs lower. At current prices at mid-$4 per bushel, corn prices have fallen more than one-third since December 2012.
In most cases, producers' positive outlook is balanced with prudence and an ongoing focus on building and reinforcing equity lost in prior years.
