Ben Buckner, chief grains and dairy analyst for AgResource Co., mentioned throughout a latest Skilled Dairy Producers Dairy Sign webinar that the world is beginning to resolve milk supply-and-demand points.

He famous that U.S. and world milk provides are rising. “Dairy product consumption has slowed,” Buckner mentioned. “We’re beginning to see demand sluggish and the manufacturing of every little thing improve.”

He mentioned drought is just not the problem it was in 2022.

“We’re seeing a extra favorable local weather outlook for the Northern Hemisphere in 2023,” Buckner mentioned. “The chances are in favor of pattern or above-trend row crop yields this 12 months.”

He mentioned whereas it’s not nice information, the silver lining is milk manufacturing progress can be simpler to realize due to the provision of feed that didn’t exist in 2022.

“Provides and logistics will enhance, so we’re type of getting again to regular in 2023,” he famous.

Since November, Buckner mentioned dairy markets have shed premium. He blames this on growing milk provides within the U.S. and Europe. Milk manufacturing within the U.S. rose 1.6% in November in comparison with one 12 months earlier.

“European milk manufacturing is surprisingly giant,” he mentioned. “Whole exported milk manufacturing is above the earlier 12 months for the primary time since 2021.”

Buckner mentioned that firstly of the warfare in Ukraine, it wasn’t clear if Ukranian corn would get to market. “However NATO and the United Nations have allowed secure passage of grain out of Ukraine to the world market,” he defined. “Grain flows out of the Black Sea area have been close to regular. Oddly, Europe has had entry to what has been the most affordable feed provide on the planet. Regardless of final summer season’s extreme drought in Europe, dairy farmers there aren’t as pressured.”

Buckner famous that European milk manufacturing progress, together with manufacturing progress within the U.S., have greater than offset the losses seen in New Zealand and Australian milk provides final 12 months.

Excessive costs cured excessive costs

Buckner mentioned butter provides within the U.S. are returning to regular.

“It seems butter consumption within the U.S. slowed through the fourth quarter as soon as costs rose above $3 per pound,” he defined. “Butter provides are actually satisfactory and certain will stay so for the foreseeable future. The butter market did what it needed to do and solved the provision drawback.”

Buckner mentioned U.S. soil moisture is quickly enhancing, particularly within the Midwest and California.

“The U.S. drought is getting smaller, not bigger,” he mentioned. “Its doable drought can be lower by 80% in California, and there are few considerations about drought within the Midwest. So, it’s doubtless U.S. milk manufacturing can be rising all through 2023.”

Buckner is projecting that feed prices this fall can be dramatically decrease. Whereas corn this spring and summer season will common about $6.50 per bushel, corn is predicted to fall to $5.30 by harvesttime.

“We may see corn costs as little as $4.90 per bushel this fall in locations like Wisconsin,” Buckner mentioned. He predicts soybean costs will fall to $11 per bushel at harvesttime, in comparison with $13.25 this spring and summer season.

“Decrease feed costs doubtless imply we’ll see milk provides proceed to rise this 12 months,” he mentioned.