Milk Prices Poised for Modest Improvement

After a few years of significant challenge, the outlook for U.S. milk producers is beginning to improve, according to a new report from CoBank. Despite projected supply increases, milk prices are poised for modest improvement in the years ahead thanks to new export opportunities and gains in processing and production efficiency. “We’re seeing dairy farm expansions, meaning producers are hopeful that prices will increase from today’s levels,” says Ben Laine, senior economist at CoBank. “These dairies are banking on the future and on global growth. We believe that there is cause for cautious optimism given prospects for strengthened international demand and the industry’s long track record of innovation.” U.S. dairies will produce over 225 billion pounds of milk in 2020 – approximately 7 percent higher than today’s output, according to projections from the U.S. Department of Agriculture. And domestic demand for milk and milk products will remain relatively flat, given the maturity of the U.S. consumer market. Nonetheless, Laine says, the industry is poised to benefit from overseas demand in Asia, Latin America and Africa driven by population growth and increased middle class consumption.