After four tough years, dairy margins should improve in 2019, Sarina Sharp told attendees at a Farm Credit sponsored session at the Central Plains Dairy Expo at the end of March. Production growth in the United States is slowing, while international milk production looks tighter for this year. At the same time, grain supplies are comfortable and major price rallies are unlikely barring the unforeseen, the dairy risk manager and author of the Daily Dairy Report said.
U.S. milk production was up just half a percentage point in the fourth quarter, the smallest quarterly growth in five years, followed by 0.9% growth in January and only 0.2% in February. “Growth is likely to be slow to nonexistent throughout 2019,” Sharp said (chart).
In its April supply/demand estimate, USDA agreed, pegging production this year up less than 1 percent, and raising most of its price estimates modestly.
“Factors in the global milk market look as promising as they have in years,” Sharp said. “Demand continues to grow and there are big barriers to rapid growth in global milk supplies so we probably won’t kill this rally with a quick bump in output. I expect much better prices over the next 18 months, though markets almost never go straight up.”