Inflation, higher feed costs putting damper on dairy

Global milk production is expected to decline by 1.1% in the second quarter, marking the fourth consecutive quarter milk production has decreased, according to Rabobank's recent quarterly dairy report. High feed costs, weather-related issues and inflation are all cited as having an impact.

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The report says that corn prices are expected to remain above $7 per bushel until at least the second quarter of 2023, which will hurt production. Analysts expect higher feed costs to be around for the foreseeable future.

The report also notes that global inflation pressure and higher prices are hitting consumers. The report notes that retail milk prices are up significantly, while sales volumes are down. Foodservice sales are also showing signs of slowing, impacting demand.

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The report also notes:

• butter, skim milk powder, and nonfat dry milk powder production levels were down in Q1.
• cool temperatures from the Great Lakes to the Pacific Northwest may have delayed the flush. Heat and drought across the southwest negatively impacted cow comfort.
• U.S. milk cow herd in April was 9,402 million, which resulted in 1% YOY lower production.

To read Rabobank's full report, click here.