Dairy Industry Off to a Softer Start

“Things are not looking as good in the dairy industry as they did this time last year. National Milk Producers Federation, Senior Vice President of Membership Services and Strategic Initiatives, Chris Galen says the milk prices are softer feed grain prices are up and that is being reflected in the USDA margin coverage Protection Program monthly price for January 2023.

“USDA announced the first dairy margin coverage monthly price for the month of January in 2023. And it was below $8, which is the lowest it's been in probably eight to 12 months. So if you're signing up for the program in 2023, you will get a payment. If you're signed up at the highest level, it's an indication that we think margins are going to be tighter and kind of mediocre for a lot of the year and particularly for larger operators. Unless you've locked in things like corn and soybean meal prices more than a year ago before inflation really hit us. You're paying a lot more to feed your cattle and that's going to really put pressure downward pressure on margins because the milk prices just aren't going to be as strong as they were in 2022.”

Galen says he hopes that inflation will recede and that there will be a good growing season for the feed crops that the dairy industry relies on.

“We'll have a nice robust growing season in the Corn Belt that will continue to allow those prices for corn and soybeans to drop but if we still have dry conditions out west that affects the alfalfa price and that's an important price also for dairy producers.”

Chris Galan with the National Milk Producers Federation