1. Today’s Dairy Market and Financial Situation
Adam J. Kantrovich, Ph.D.
Associate Professor of Agribusiness
Clemson Agribusiness Team
Clemson University Extension

2. Dairy Canada vs. U.S. cow numbers S&D Costs
U.S. Per Capita Consumption
Global Per Capita Consumption
Dairy Production & Prices
Now What?

3. Canadian Reference Canada, Est. Population of 36.95 Million
Dairy Farms w/ Milk Shipments: 10,951
Dairy Cows: 945,000
Dairy Heifers: 454,300
United State: Est. Population:325.7 Million
9,394,000 Cows
California: 1,749,000
Wisconsin: 1,278,000
New York: 623,000
Idaho: 600,000
Pennsylvania: 525,000
Texas: 511,000

6. Milk Price & Costs

8. April 2018 Mailbox Prices
Image from Hoards Dairyman, July 23, 2018

9. 2017 Annual Monthly Average Cost of Production per cwt
2017 Annual Monthly Average Cost of Production per cwt. of Milk – USDA ERS
All States*
Total Dir & Overhead Expenses per cwt $ $
With value of unpaid Labor and Management, capital recovery, & opportunity cost of land (rental rate) $
Average Annual Monthly Mailbox Milk Price per cwt $
USDA ERS for 2017 using 2010 base & updated using current milk production per cow and production input indexes
December mailbox price was estimated for Avg. Monthly Annual Mailbox Price

11. U.S. Per Capita Consumption

12. Fluid Milk Consumption

14. Cheese

15. Ice Cream & Frozen Products

16. Condensed, Evap & Dry Milk

17. Total Dairy U.S. Per Capita Consumption (Dairy Equivalent Milk Fat Basis)
6% Increase for years

18. Dairy Consumption Tid Bits
2012 – 2017: Whole Milk sales increased 8%
90% of non-dairy milk consumers also purchase dairy milk
Flavored milk growth of an estimated 18% (2012 – 2017)
Who’s Cheese is being eaten, U.S. or Imported?
In some cases it is cheaper to import “fine cheeses” vs. U.S. produced cheese
Eat more pizza? Consumption of Pizza growth globally has continued to rise
Butter

19. Global per capita Consumption

24. Global Dairy Trading Index

25. Global Dairy Trading Index
Online global dairy market
10 years old
Some have referenced to indicate demand

28. Global Tid Bits
Dairy Prices in other parts of the world are higher than the U.S.
May push U.S. price upward to meet global pricing

29. Dairy Production & Prices

32. USDA - NASS

34. U.S. Annual Cow Numbers

35. U.S. Annual Milk Production

36. U.S. Annual Rate Per Cow

38. Sept. 19, 2018 Milk Production Report
23 Major States
Aug. Prod. At 17.2 billion pounds, up 1.4% over Aug. 2017
Production per cow avg. 1,974 lbs for Aug., up 28 lbs. from Aug. 2017
8.74 Million head, 3,000 head less than Aug. 2017
4,000 head more than the previous month
U.S.
Milk production up 1.4% (18.3 billion pounds)
Production per cow for the month of July avg. 1,946 up 27 lbs. from Aug. 2017
Milk Cows at 9.40 million head, 4,000 lower than Aug but 5,000 more head than July 2018.

39. Now What

41. Dairy Cow Slaughter
Jan – June 2018, Slaughter up 4.9% over same period 2017.
June Cow slaughter 2nd highest since 2000 (237,500)
2009: 256,000 June Slaughter

42. Good News
Some indications in 2018 in some of the “big” 23 states that a contraction might be in the works in cow numbers
Dairies are continuing to go out of business with fewer cows heading to other dairies
High dairy cow slaughter
Lower replacement heifer prices
Higher International Prices
While many southern states continue to see fewer dairies and cows a few states are seeing a slight increase in cow numbers
Positives on the export side of the market

43. Summary Still, too Many Cows producing too much milk!
Some parts of the country can not produce what is necessary for profitability.
Some limited regions/states were having processing capacity issues
New processing capacity is supposed to be coming but may not be soon enough
Bullish variables look to increase prices (only slightly, 10-15%)
Not enough to make many lower performing dairies profitable.
Many may still have difficulty with cash flow
Demand for Cheese and Butter looks to be increasing
2018 Price Forecast for All Milk Price to $16.15 – $16.45
2019 Price Forecast for All Milk Price raised to $17.45

44. Contact Information
Adam J. Kantrovich, Ph.D
Associate Professor of Agribusiness
Clemson University Extension
Sandhill Research and Education Center
900 Clemson Rd.
Columbia, SC
Office

45. Clemson University Extension AgBusiness Team
Thank You
Clemson University Extension AgBusiness Team
2017 Enterprise Budgets