Are dairy farmers drowning in milk?

Much has been noted in the past couple years about the state of the dairy industry in Wisconsin. With news stories popping up about exports declining and farms losing a home for their milk, let’s take a macro look at what is causing the past, current and short-term future market conditions. While the milk market faces excessive supply, there is some positivity on the horizon. The U.S. Dollar is the weakest it has been against the Euro since early 2015 and exporters are now starting to move supplies to foreign buyers. The U.S. Dairy Export Council is aggressively trying to increase exports by five percent, which would send export levels to nearly 20 percent of the country’s milk supply. Unfortunately, this process will take time. In the short-term, inventories continue to grow without equal offsets by global buyers. This will continue to suppress prices, most likely, to levels that are below breakeven throughout most, if not all of 2018.