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April 2020 Dairy Market Report Shows Effects of COVID-19

Clint Thompson Dairy

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Dairy farm with cows out front.

COVID-19 has really affected many aspects of agriculture, including the U.S. dairy industry. According to a new report, the entire U.S. dairy industry is now deep in crisis mode. It’s looking for ways to contain the price and supply chain damage brought about by the coronavirus.

This information comes from the April 2020 Dairy Market Report. It notes while domestic commercial use in all products during the first months of 2020 was already weakening, U.S. dairy exports were strong at that time, showing gains during the December through February period.

The national dairy cow herd was entering into another cycle of expansion. It was setting the stage for what could have been 2% to 3% year-over-year increases in milk production. And the DMC margin in February was still over $10 per hundredweight, above the level necessary to trigger federal assistance. But in late March and early April, it became clear that total demand for U.S. produced milk and dairy products would suffer serious losses. Cheese prices collapsed in the CME cash markets. Butter and nonfat dry milk cash prices continued to erode.

U.S. domestic commercial use of milk in all products was below levels from a year ago on both a milkfat and a skim solids basis during December–February. Lower domestic use of many of the major dairy product categories, except cheese, contributed to the overall loss of domestic dairy use.

USDA’s April dairy outlook, the first forecast to incorporate market impacts of the COVID-19 pandemic, projects a much lower 2020 average milk price than it had just a month earlier. The April estimate is $14.35/cwt. It is almost $4 below its March estimate of $18.25/cwt.

To see all the numbers from the April 2020 Dairy Market Report, go to the National Milk Producers Federation website, nmpf.org.