The Dairy market appears to have stabilized after the uncertainty of 2020. Brian Doherty, Senior Market Advisor with Total Farm Marketing said despite more stability, there are some warning signs ahead.
“I think there are some warning signs, and it’s production. We’ve been at this for a long time, and if you stop and look at the production capability that our producers have today versus a decade ago, or particularly 20-30 years ago, it’s been a revolution. When you get high prices, you get some natural expansion when you have good foodstuffs, and we’ve had good crops in the dairy-producing regions, so there’s feed availability. That’s our biggest wet rag; we’re good at what we do.”
Doherty says one hedge against future uncertainty is potential demand.
“Don’t underestimate the demand market worldwide, especially as we come out of COVID. But still, it looks like the market has, a couple of times now, been way at the forefront of that, and we get the rug pulled out from under us. And yet, those rallies kept the production cycle active and alive, and the last several production reports have indicated that.”
Doherty added there will likely be some future government support coming into the dairy market as well.
“It will, and I’ve always said over the years don’t try and spend too much time out-guessing what politicians are trying to out-guess. But there’s going to be some support out of this. There will be, but what the numbers turn out to be and the timetable for when we see this support, we know there will be support. But we have to recognize that when these things cycle back into the market, I think the market has now gotten a taste of it twice and realized bears are ready to go when this comes in because they know this is short-lived. Whether it’s a two-month window or a six-month, it still has a short-lived shelf life.”
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