Milk prices fall
March 4, 2010
Wholesale milk prices for dairy owners in the area have decreased after a rise several months ago.
Local dairy owners say it’s only a short setback and predict prices will start climbing again later this year.
Alan Anderson of Anderson Dairy in Roosevelt County said globally, prices for cheese and milk whey had gone down while those for butter and skim milk increased.
Portales dairy owner Alva Carter Jr. said the largest fraction of milk produced in the area goes to cheese for restaurants. Prices have dropped 60 cents to 70 cents per 100 pounds of milk, he said.
“We don’t foresee that as being a long-term decrease,” Carter continued. “We do see that milk production is down through the whole United States.”
Harsh winter weather has decreased milk production in the East, California and the local area, Carter said. He expects lower production to bring about higher prices in the next two to three months through supply and demand.
Anderson said projected prices are $12.88 per hundred weight for March, increasing to $15 for August. His production remained steady through the bad weather, and he attributes the expected August increase to the beginning of school, when milk demand goes up.
“And I think that pretty much follows the cycle,” he said.
Anderson believes the current slump in prices is a normal after-the-holidays lapse.
Carter said shoppers are worried about losing jobs and possible higher taxes and so people aren’t buying as much. With the slow economy, people are eating out less, so less cheese is needed in restaurants.
“It is a small setback,” Carter said.
Most dairies remain at the break-even point under the current prices, he said.
Anderson said dairy owners can’t make up losses and recover after last year’s low milk prices when they are only breaking even. They won’t be able to make major improvements for the next couple of years, he said, although dairies need constant work to keep up with wear and tear.
“I don’t think there will be the expansion, at least in this area,” Anderson said.
Dairy owners follow the market and don’t have a lot of optimism about expansion, he continued. However, Anderson said, the situation is beneficial because as producers keep their herds low, supply decreases and milk prices rise.