A dairy market analyst says the outlook for milk prices is getting better.

The Daily Dairy Report’s Sarina Sharp tells Brownfield softening feed costs and strong butter demand could help farmers get into the black.

“Butter production is up 3.6% this year—that’s January through August, but domestic demand is up about 8%, she explains.  “We are digging into our butter supplies, tightening those inventories, and yes, raising prices.”

She says the spike in butter prices is typically short-lived and Dairy Revenue Protection plans could lock in some price protection.

“Dairy producers can protect these prices that are close to their break even and then leave themselves some upside, the DRP insurance program is a really great way to go about that,” she recommends.

Sharp says tightening global milk production is likely to lead to a recovery in powder prices and also help raise farmer returns in the coming months.

Brownfield interviewed Sharp during the recent Michigan Ag Credit Conference.