A look at dairy in 2016
Fourth audio in a series produced in concert with the Wisconsin Agricultural Outlook Forum Thursday, Jan. 21 on the UW-Madison campus. Registration costs $15.00 and covers both the lunch and the forum. For more information and to register, visit: http://agoutlook.cals.wisc.edu/
KEYWORDS: Wisconsin Agricultural Outlook
Mark Stephenson, Extension Dairy Policy Analyst
Department of Agricultural and Applied Economics
UW-Madison College of Agricultural and Life Sciences
Phone (608) 890-3755
2:53 – Total Time
0:17 – More of the same in 2016
1:07 – A lot of dairy to clear the markets
1:37 – Look for prices to improve later in 2016
2:09 – Cull cows, tighten belt
2:45 – Lead out
Sevie Kenyon: Looking into the year 2016 for Wisconsin dairy business. We’re visiting today with Mark Stephenson Center for Dairy Profitability University of Wisconsin-Extension in the College of Agricultural and Life Sciences, and I’m Sevie Kenyon. Mark, what kind of year can dairy producers look forward to?
Mark Stephenson: You know we’ve had just a hint with futures markets in the last month or two of prices that have been increasing a little bit, and I think some people have felt like “okay, we’re at the bottom, we see our way back up” and I actually think that what were looking at is a small increase that’s going to be a false one, and I think we’ve got a bit more decline to go. First six months of the year I think could be a bigger drop than a lot people are thinking, and then some recovery by the time you get into the third quarter of the year. I don’t think it’s going to be a remarkable year, I think if you thought that 2015 was okay, I think you’re going to think that 2016 was okay too, except that this is like two years in a row now of these, just treading water, not really feeling great or not horrible.
Sevie Kenyon: Mark, what are you looking at as affecting these prices?
Mark Stephenson: We’ve just got an awful lot of dairy product on world markets, as well as U.S. markets starting to back up. Our exports have been down a bit this year, and exports are about 14-15% of our dairy production. When those get backed up, we have to clear them through our domestic markets and sales and that’s really meaning that we are getting some downward pressure on prices. Cheese stocks are starting to build, those products have got to clear the markets.
Sevie Kenyon: Mark, do you see a silver lining in this year ahead?
Mark Stephenson: Yes, I do. For one thing we aren’t looking at anything like a 2009. I expect that prices are going to soften here for a few months and then I think we’re going to see some strengthening again so this is kind of like, we’ve got to get through the next six months or so and then I think things are going to be looking a bit more like a silver lining. Good news is that farms balance sheets have been strong and people have some staying power if this looks like the industry you want to be in I think that most folks are going to be able to stick it out.
Sevie Kenyon: Mark do you have any advice for producers looking at 2016?
Mark Stephenson: Stay the course, I think we’re going to have to be a little bit careful about the kind of milk production that we’ve had in this northeast quadrant of the country. We’ve been producing a lot of milk; we’re up four percent in Wisconsin in this last year. We probably can’t handle that kind of increase in the year a head. You slow down milk production by not pushing cows as hard and milk production per cow has not been so very much and we’re probably going to trim some cows out of the herd too, we had some to come. You know I don’t think it’s that we’re going to lose farms at an unusual pace but you know we’re continuing to consolidate.
Sevie Kenyon: We’ve been visiting with Mark Stephenson Center for Dairy Profitability University of Wisconsin-Extension in the College of Agricultural and Life Sciences, and I’m Sevie Kenyon.