Milk Prices Are Improving, Not Enough to Help Equity Losses Yet

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Dairy cows at World Dairy Expo ( Betsy Jibben )

Prices are improving for dairy farmers across the country. However, analysts say it’s not enough to aid financial losses over the last couple of years.

“I think the real problem is at $18 [Class III near term milk contracts are] probably good for a long-term average,” said Mark Stephenson, an economist with the UW-Madison. “But, we have folks that really need to restore their balance sheets. The balance sheets have been damaged over the last four years with borrowing additional money.”

Other analysts agree.

“The margins have only improved slightly,” said Mike North, a broker with Commodity Risk Management Group. “There’s definitely some improvement in the overall profitability at the farm but we have not seen this big, robust recovery that we’re going to need to reset some of the equity losses that have taken place over the last several years.”

USDA is forecasting higher Class III prices for 2020.

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