Jekanowski: Dairy Margins Could Shrink

American dairy producers are boosting production this year and will likely continue in 2022. The USDA said milk output in April was up 3 1/3% from April a year ago, and the cow herd is 113,000 head larger. April milk per cow is 40 pounds more than this time last year. Looking ahead to next year, USDA Outlook Board Chairman, Mark Jekanowski said output in 2022 will likely top this year by about 1%.

"And that's coming in despite an expectation for a decline in cow numbers. And that's more than offset or expected to be more than offset by an increase in milk per cow; so higher productivity."

But lower prices. Down to about 2.3% this year for an all-milk average price of $18.50 cwt; not an unusually low price but feed costs are forecast up 20%-30% cutting in to margins. So Jekanowski said the combination of lower milk prices and much higher feed costs, "is likely to trigger some payments through margin protection program."

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