Dairies Forced to Dump Milk
Some U.S. dairy farmers last week had to dump milk, with no place for it to go. The market has seen a sharp decline in prices in the past two months. Dwayne Faber is a dairy farmer in Washington.
Faber… “We've seen a complete collapse in the milk industry here with COVID-19. 30% of our milk product goes into food service and into the restaurant industry, and that's been decimated. Another 16% goes overseas in export, and that is not moving. That's being stored now in warehouses. We've gone from an $18 milk price to a $13 milk price in the matter of 60 days.”
Faber hopes these catastrophic events will also serve as a lesson to him and other producers on hedging a profit when possible.
Faber… “I had the opportunity to sell milk at $18 and I was too good for that. I was going to wait for $19. And then it went to $17 and it wasn't $18, so I left it alone. And then it went to $16 and a good friend called and said, well, what if this thing is for real? And so I did a put a whole bunch of insurance on and I've got some other coverage as well. And so, we are somewhat covered. It's not the $18 that we could have done, but it is something.”
May Class 3 Milk futures fell another $0.70 on Friday to $12.18 which is well below cost of production.