Beware the Ides of March - Overproduction!

Nothing but bad news for Class III milk prices for the rest of 2010. Sales are slow, exports are slow, and Vilsack's Dairy Advisory Committee has yet to meet. Why all the drama? Dairy-farmers just need to reduce production 3% to 5% ASAP before the spring flush and schools let out for the summer.

I know we all need as much production as possible now to receive a bigger milk check to cover costs. But does a $12.50 net milk check with 5% OVERPRODUCTION really help us?

Let's say you ship 10,000 pounds per day @ $12.50/cwt = $1,250.00. WE ALL reduce production 5%, it's the only way it will work for all dairy-farmers in the US. Now you're shipping 9,500 pounds per day @ $14.50/cwt = $1,377.50 per day. I feel that this is a LOW estimate on the increased milk price.

Remember that the 3% to 5% overproduction cut our pay prices 30 to 50 percent over the past few years. The reverse should be true, Mar 2010 to Feb 2011 Class III future price is $14.22. A 30% increase in pay price is $4.26/cwt, added to the $14.22 current price give dairy-farmers $18.48/cwt.

This way everyone can stay in business, just milk 5% fewer cows. Don't be greedy!

Milk Prices below break-even for 2010

Anyone else disgusted by the Class III Futures Prices & Next 12-Month Averages as much as I am? Looking at the current prices compared to the 3 year average prices paid for milk is backbreaking. Feb-10 price is the only month greater than the 3 year average, but only 77 cents better.

The Jun-10 price of $13.60 is a whopping $3.20 LESS than the 3 year average of $16.80! Looks like 200,000 to 250,000 more dairy cows will need to be cull ASAP! 

If the average dairy herd size is 150 cows, that means 1,667 dairy farmers will need to exit the business! It may be a new year, but looks like the same old BELOW BREAK-EVEN pay prices for the U.S. dairy-farmers!