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FI Agriculture Recap: Dairy Prices May Take Hit as Production Increases

fruit salad inside bowl beside glass of milk on brown board

The USDA is predicting increased milk production this year and next, pushing prices lower in the near term.

University of Missouri economist Scott Brown told Dairy Herd Management (June 22) producers are getting squeezed by higher feed costs. “We’re in a precarious situation on dairy markets, as well, as cheese prices have been coming off of what was some stronger prices,” Brown said. He said the higher cheese prices were driven, in part, by the pandemic and a surge in take-home pizza in the last year.

Barbara O’Brien, president of Dairy Management Inc. told AgriNews (June 27) the industry’s unified marketing plan is focusing on Gen Z (those roughly 10 to 23 years of age) to drive demand.

“Their spending power is estimated at $100 billion, and they’re changing expectations of brands,” O’Brien said. “They are willing to spend their money on brands that are doing good and right in their view.”

In other news:

Superstores and SNAP: Superstores are having a major impact on the USDA’s Supplemental Nutrition Assistance Program, diverting consumers from traditional supermarkets, as well as grocery, convenience and combination stores, and saving them about $6,390 annually, a USDA analysis indicates. Stores within a 3-mile radius of superstores saw their SNAP business diminish, but the number of stores accepting SNAP payments remained relatively steady.

Grain prices: Jerry Gulke, president of the Gulke Group, says grain markets may be entering the fear stage after two weeks of lower prices. Gulke cited the U.S. Supreme Court decision overturning a 2020 appellate ruling limiting Environmental Protection Agency waivers to refiners who already had received them. Gulke told AgWeb (June 25) fears of flooding after weeks of little rain also are pressuring markets. In addition, investors were looking ahead to this week’s acreage report, which was expected to show more planted corn acres and fewer soybean acres, AgWeb reported (June 25).

Cattle prices: Justin Tupper of the U.S. Cattlemen’s Association told the Senate Agriculture Committee last week packers have a lot of leverage over cattle prices as a result of captive supply. Glynn Tonsor, an economist with Kansas State University, told the panel, however, that “core differences in supply and demand” are responsible for market changes. No representatives from the packing industry testified, Drovers reported (June 24).

Refinery ruling: The U.S. Supreme Court Decision (June 25) that struck down a lower court decision on three improper small refinery exemptions granted by the Environmental Protection Agency was roundly panned by a coalition of renewable fuel and farm groups, including the National Corn Growers Association. In a 6-3 decision, the court ruled in HollyFrontier Cheyenne Refining v. Renewable Fuels Association that refiners who allowed an extension to lapse can apply for a further extension. The decision reversed a 10th U.S. Circuit Court of Appeals decision. “While we are extremely disappointed in this unfortunate decision from the Supreme Court, we will not stop fighting for America’s farmers and renewable fuel producers. Further, we are optimistic that other elements of the 10th Circuit decision, which were not reviewed by the Supreme Court, will compel the Biden administration and EPA’s new leadership to take a far more judicious and responsible approach to the refinery exemption program than their predecessors did,” the coalition said.