Draw a big ‘M’ through 2020

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Draw a big ‘M’ through 2020

The National Milk Producers Federation’s chief economist says 2020 dairy markets turned into a giant “M” for the year with record highs and lows.

“The story of the year is cheese prices.”

Peter Vitaliono says cheese prices tanked to a record low in March following pandemic shutdowns, then turned sharply higher during the first purchases of USDA’s Farmers to Family Food Box program.  When those slowed, the market dropped some, but then the second round of purchases, along with some food service reopening, again brought another turn of highs and lows to prices.

“You see the milk price chart for this year, with a forecast into next year, shows that same letter ‘M’ shape.”

He’s forecasting 2020 milk prices to end the year at $18.20 per hundredweight.

However, Vitaliono says next year COVID payments and food box program purchases are not expected at the same time dairy farmers are increasing herd sizes and feed costs are forecast to rise.

“Looks like we’re going to have the final downstroke of the “M” coming up and staying down for the foreseeable future.”

He’s calling for Dairy Margin Coverage program payments during at least the first half of 2021 at $9.50 level.

Vitaliano gave analysis during NMPF’s recent dairy economy webinar.