Dairy Industry Price Outlook Favorable

The USDA’s most recent Milk Production Report stated much of the overall growth came from more productive cows as cow numbers are down from a year earlier. In our region, milk cow numbers were mixed. Idaho saw a 12,000 head increase from last October, Colorado saw a 5,000 head increase over last year. In Oregon there was a 1,000 head decrease and in Washington there was a 2,000 head decrease in comparison to a year ago.

 

Despite the increase in monthly U.S. milk production, outside of the U.S. milk production growth has slowed or decreased due to weather and capped production growth. Mark Jenson, the chief risk officer at Farm Credit of America says production cost should remain low heading into 2017. When it comes to risk management, he says producers need to think outside of the box.

 

Jenson: “Often times when people talk about risk management it’s about how they are using marketing tools that are out there and available today to take a look at how they can hedge in some prices and try and minimize the downside risk as well as take advantage of upside risk. I want to talk about the other side of that equation of risk management that I don’t think people necessarily always equate to that and that is financial management. Really understanding what is going on in your operation. Your real cost of production not just the cost associated with variable costs but the cost of overhead, living expense and how that all rolls in to the overall profitability of the operation — I just don’t want producers to not forget about that aspect too.”