|
south central WI | What's everyone's thoughts on 2021 milk markets? Here's a few things that might have an impact. My consultant sent an email showing class III predictions of $12-15ish for the first 2 or 3 quarters of 2021. Cost of production, according to my milk marketing coop, averages $16-17/ cwt, with the lowest 20% at a dollar or 2 less, and the highest at $18-20. With these numbers every farm stands a chance to lose money . The rest of the classes of milk don't show as drastic of a drop, yet still lower.
I haven't forward contracted any milk, but I might end up doing that. I have put a floor on all my 1st quarter milk through DRP, and half or 2nd quarter. I will put it on all of it for 2021, probably sooner than later. I can get coverage that is at or above my COP. Personally I think all dairy farms should use DMC also. Cost is minimal and it protects against a price collapse like predicted.
The reason for the price collapse is due Covid and the election (please don't make this political, hoping this doesn't come off that way). We had Farmers to families food box program which held up (or inflated) cheese prices. This will probably end. A quarantine would also lower cheese consumption as well. Class 1 isn't as affected since it the food box didn't help that as much.
Another thing we are doing is taking the profit from this year and paying down debt. We really need new machinery, but we will get by for another year. Paying debt (and therefore paying taxes on it), will lower our COP and help us in the future. I would rather pay a little tax than have newer equipment and a higher COP. | |
|
Dairy forecast
