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Some improvement in milk prices

2020 Milk Price Outlook

2 Min Read
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The past year was another difficult one for many dairy farmers across the country. Another year of low prices forced more producers out of business. 

Bankruptcies were not limited to the U.S., low prices and drought were forcing farmers out in Australia, as well. Yet, by late in the year some milk product prices were looking up with Class III milk breaking $20 per cwt. 

Poor returns pushed dairy cow slaughter to weekly levels not seen since the dairy buyout days in the mid-1980s.  Over 70,000 head per week went to market over two months in February and March before slaughter declined to levels seen the year before.


Rising milk prices should limit cow slaughter in 2020. Even with high cow culling, by September cow numbers had reversed course and were growing again.

Growing milk production per cow combined with more cows led to growing milk production. 

Milk production in Texas led the way with almost 7% year-over-year growth, the largest growth rate of any state. Milk production in the Texas-New Mexico region was up almost 4% over 2018.

Milk production is likely to increase in 2020. Milk prices are likely to increase also, over 2019 levels. 

Cheese prices have been an underlying area of strength as cheddar prices have increased steadily all year before jumping to $2.15 per pound in November. Prices normally peak at that time of the year before falling to close out the year. 

Rising prices set the stage for better prices in 2020. While cheese prices have been a standout, butter prices lagged below a year ago late in 2019, as did whey prices. 


While prices are starting the year higher, several areas will be important in 2020. As with all agricultural commodities, trade will be a key this year, as it has been a source of uncertainty. Export growth will be important as the industry has become more trade dependent. 

Feed prices and quality will be a concern moving deeper into 2020. The host of problems in the 2019 growing season led to some higher prices and tighter supplies for some producers. Concerns about feed quality may impact some producers. 

The last key is consumer demand.  While per capita consumption of all dairy products has been growing, certainly milk consumption has declined.

But, whole milk consumption has tended to grow in recent years. Yogurt consumption has struggled recently after being a tremendous growth area. 

A growing economy will aid demand. But, consumer tastes and preferences, as well as diet trends will be a key in 2020.

About the Author(s)

David P. Anderson

Livestock Marketing Specialist, Texas AgriLife and Texas A&M university

Derrell Peel

Livestock marketing specialist, Oklahoma State University

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