“I’m really looking at a pretty substantial increase from where we were last year,” said the director of dairy policy analysis at the university. He estimates a $22 average All-Milk price, which would be $2 to $2.50 higher than in 2021 when the average All-Milk price was $19 per hundredweight. Although there could be some swings in the price due to volatility, he expects the price to remain relatively flat through the year.
There is a catch, though, in the form of elevated input costs.
“It could be a good milk price year, as long as costs of production are not too high,” he explained. “If you have adequate feed in the bunk that you produced and harvested, it might be a decent year.”
In parts of the country where farms tend to purchase more feed inputs, this is where Stephenson said margins will be particularly thin. On the other hand, in places where there is plenty of feed and it is of high quality, it will make it attractive to produce more milk.
Even with improved milk prices in the forecast, Stephenson said, “Continue to look at risk management options.” He advised farmers to watch for ways to control variable costs of production and to put a floor under price opportunities when they present themselves.
“Some farms will have pretty good margins, as long as they keep input costs relatively low,” he reiterated.
