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A Dairy Nice Surprise To Kick-Off 2014

by Mike Austin

So far 2014 has been a rather pleasant surprise for dairy producers. Granted...most would like to have more hay in the barn and nobody enjoyed the Polar Vortex, but dairy prices have been much higher than what had been foretasted as part of the USDA November Production Report.  Currently we are looking at Block Cheese at $2.20 a pound and Barrels at $2.16..even Butter is at a $1.65. Class 3 prices are just as encouraging with March contracts flirting with $20.00 per hundredweight and Feb and Jan contracts well above $20.00.

According to UW Dairy Economist Mark Stephenson we can thank strong demand for this rally..both on the domestic and export front... although exports are the most encouraging factor, now accounting for 15% of total dairy sales. However we all know how fragile markets can be and that volatility has become a common factor in our marketing year. That is why Stephenson shared with me that now may be a good time for producers to at least look at their risk management strategy.

Stephenson says he sees 2014 as one of those unique years were both milk production and producer prices will be up....and that 2014, with lower feed costs and higher prices should result in strong dairy margins.
Although Stephenson did not commit to an average Class 3 price for 2014..other economists and market analyst feel $18.00-$18.50 seems realistic which is nearly a dollar a hundred higher than the forecasts we were sharing just last month.  We obviously have a long way to go..but dairy in 2014 is off to a strong start