Dairy Margins Tighten

Welcome to the line on agriculture report. This is Lorrie Boyer for the Ag Information Network. With Farm Bill programs expiring and certain coverages limited to the calendar year, Congress must decide between passing a new bill, which is an increasing unlikely option or opting for an extension. The duration of this extension remains unclear, with possibilities ranging from a few months to one or two years, potentially influenced by the upcoming 2024 presidential election. Senior Vice President and Member Services and Governance Chris Galan, with the National Milk Producers Federation, explains the current state of dairy economics and an unexpected turn for butter, which is a popular store shelf item.

"This has been a really tough year for dairy farmers. So far, the price of milk really dropped last year, we had a great year and a lot of money was made by farmers. And then what happens usually is that high prices tend to cure high prices. We saw some increased production Come on. And as a result, prices and just margins overall have really tightened up. The good news is it looks like we've reached the bottom and that margins will get better and prices for milk will get better as we get through the fourth quarter of 2023 butter which is a big driver of milk prices that has reached record levels at the Chicago Mercantile Exchange. So that's a really good sign."

Although production has begun to taper off due to high commodity prices, whether the economy and other factors, prices are expected to level back out eventually.