“It seems like the producers in Idaho have really stuck to business pretty good and kept the herd sizes about the same and I think it’s good for Idaho that milk prices up and we have the production we do,” said Market Analyst Clark Johnston, of JC Management.
Last fall milk prices hit a five-year high to more than $20.00 per hundredweight. And what goes up must come down. Prices now hover at the mid—$17 dollar mark and producers are confident that they’ll stay here for a while.
All indications show that the market will stay in the $17 per hundred-weight range. Farmers say that's good and bad.
“There isn’t any carry, there’s no incentive for us to forward contract our milk so as you go further out in time, the prices fall off and there’s no carry there. But at $17 dollars we are right at break-even or above for most producers,” said Darren Tabor of Donnelly Farms in Shoshone.
Last year was a rollercoaster ride for the dairy sector. Last year at this time, class III milk prices stood at the $14 range per hundredweight. Most Idaho producers break even at about $17 per hundredweight, so when milk prices are as low as $14, farmers lose money.
“The fact that it stays there is good for us, the gains we made helped us pay off debt the prices will help, but not save us,” added Taber.
Steady milk prices are critical for dairymen. University of Idaho Ag Economist Garth Taylor studies dairy revenues every year. Last year was a record-breaker, with Idaho dairy grossing $2.8 billion.
“It’s the milk prices that drives us,” said Taylor. “It's the milk that drives our forecasts all the time. There were some weak spots in it, but as the year progressed, we got stronger and stronger milk prices as the year went on.”
Milk prices are up 19% over last year. And while $17-dollar prices sound good and better than $14-dollars, per hundred-weight, for most producers the underlying numbers are still break-even.