Dairy Market Snapshot

Dairies across the Pacific Northwest are optimistic entering the second quarter of the year. Northwest Farm Credit Services recently released their quarterly industry Market Snapshots. Northwest FCS Vice President of Market Research and Development Michael Stolp gives an update on the region’s dairy industry.?Stolp: “Dairy producers are benefitting from solid profit margins. Milk prices are at near-record levels, supported by historically high U.S. dairy product exports. Although feed prices are increasing, milk prices are rising faster than costs. Milk prices are expected to remain strong in 2014, but could be pressured lower by rising domestic milk production and increased competition in global export markets. Higher hay prices in the Northwest could also impact dairies’ profitability. Regional hay prices will be pressured by demand from California where irrigation water shortages will limit forage production.”?Also mentioned in the quarterly snapshot is the fact that the industry is experiencing strong exports. Although February milk cow numbers in Idaho, Oregon and Washington declined 0.62 percent year over year, Northwest milk production for the period increased 2.80 percent. Slightly lower cow numbers may be attributed to high slaughter cow prices. Replacement cow prices are also high, ranging between $1,800 and $2,300 per head.