Credit for stronger milk prices for the rest of this year are possible due to a shrinking U.S. dairy herd, lower domestic and global milk production and increasing domestic and global demand for dairy products. Also, dairy herds in the U.S. had 81,000 fewer cows in their November 2022 inventory versus May of 2021.

The anticipated high price of milk comes at the cost of a reduction in cow number. But high cull cow prices make this an opportune time to thin the dairy herd, especially with high feed prices expected to continue through 2022.

“My thoughts focus on the irrefutable facts,” says Charles Crave, a dairy and cheese producer from Waterloo, Wisconsin. The dairy industry has been shouting for years to know what your cost of production is. Well, producers have received higher prices. However, are we utilizing our knowledge and relationships to know our bottom line of production?

“Dairymen realize that high priced feed makes high priced milk. So, I wonder if dairy producers are capitalizing on that ancient axiom,” notes Crave.

“We all make mistakes which may lead to poor choices from time to time. The risk escalates with higher inputs,” he adds. “Let’s be certain that our operations are positioned for success and continue to focus on top-notch management practices every day.”
As this year progresses, dairy exports are expected to stay relatively strong for nonfat dry milk and skim milk powder. Although milk production is going down world demand for butter is rising sharply, at a 7% pace and global cheese consumption is steadily increasing. The industry realizes that port congestion, container and labor shortages stemming from trade imbalances created by the pandemic undercut dairy exports the past couple of years.

Keep in mind that price forecasts will no doubt change as the level of milk production, domestic sales and dairy exports unfold.