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Dairy profits rise with falling feed prices

Sep 24, 2024
By Farms.com

2024 Sees record high dairy margins amid cost drops

 

This year, US dairy farmers are enjoying a reversal in fortunes, with profit margins swelling due to a spike in milk prices coupled with a drop in feed costs, according to the latest USDA report.

The report has adjusted the forecast for wholesale milk prices to $23.05 per hundredweight due to reduced national dairy herd numbers and a cut in total milk output by 400 million pounds.

As feed prices for essentials like corn and soybean meal decline, farm margins have seen substantial growth, with July recording a high of $12.33 per hundredweight—the highest in 2024.

The expected continuation of reduced milk production through 2025 suggests that prices could climb even higher, reaching an anticipated $23.45 per hundredweight.

Despite these gains, the reduced herd growth due to a limited supply of heifers might slow down potential expansions. The rising dairy costs are also likely to impact the competitive edge of US dairy products both domestically and abroad as food service sectors grapple with their own rising costs.

On the consumer front, there is a noticeable increase in dairy spending within the grocery sector, driven by a general downturn in out-of-home food expenses. This shift could potentially prompt farmers to increase herd sizes or invest more heavily in their dairy operations, focusing on sustainable practices and premium product offerings despite the historical challenges posed by fluctuating feed and operational expenses.


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