April 25, 2014 – HighGround Dairy’s Eric Meyer discussed his rather bullish view of this week’s March Milk Production report and March Cold Storage report in today’s DairyLine Radio broadcast. Meyer said he looked more at First Quarter milk production and is amazed that it was only a 1 percent increase from the same period a year ago, “at a time of some of the finest returns to producers ever. “
He said he zeroed in on cow numbers and “that seems to be where the issue is,” specifically cow numbers in the Upper Midwest which have actually decreased 4,000 head over the past four months. “We’re just not seeing the type of cow number growth that you would anticipate during bull markets of the past,” he said.
Switching to the Cold Storage data, Meyer said the picture is one of butter and cheese supplies sharply below the previous year and “when you look at the percentage declines, we haven’t seen these kinds of numbers since February 2008 and, on total stocks, since November 2001, so those are really hard facts to ignore.”
Meyer said “We tend to build our stocks during the first half of the year and then whittle them down during the second half.” “When you look at cheese stocks, this is the lowest inventory build between November, what seems to be the seasonal low, through March, since 2008 and we remember that was the last true bull market in dairy.”
Is he predicting a MILK SHORTAGE ahead?
“No,” answered Meyer, “The issue here is that we’re just not building the milk supply that would suggest to us that the market crash is coming as we’ve seen in the past with bull markets.” Meyer says we need to “see more infrastructure build on both the cow numbers side, the supply side, and then on the inventory build standpoint.” He warned that we may see a “seasonal correction here with the spring flush but we also think this puts the Third Quarter at risk for higher prices, not necessarily record high prices but perhaps another leg up on from the seasonal low.”