A smaller herd and a firmer price

We flagged the labeling proposal a few weeks back and the tariff line the week after that. This week we want to slow down and look at something quieter but arguably more important to your bottom line: the national dairy herd has kept shrinking through the spring, and milk prices have moved with it.

Federal production data through May shows output essentially flat to slightly down year over year, which sounds unremarkable until you look at why. Cow numbers nationally have been drifting lower for months, and cull rates — the pace at which producers are sending cows to slaughter rather than replacing them — have been running well above last year's pace. Fewer cows, similar per-cow output, means less milk overall, and less milk has done what it usually does to price.

What "firmer" actually means for you

If you buy milk directly or your cheese pricing is indexed to a wholesale benchmark, you've probably already felt this. Benchmark milk prices have climbed noticeably off their winter lows over the past several months — not to a dramatic spike, but a steady, sustained recovery that's now several months old and doesn't show obvious signs of reversing before harvest season.

For members who lock in supply contracts on a rolling basis, that's worth planning around now rather than at your next renewal deadline. A contract signed in February, when prices were still near their floor, may already be underpriced relative to where the market sits today. If you're the buyer, that's a conversation worth having proactively rather than waiting for your supplier to raise it. If you're the one selling milk or fresh curd upstream, it may be the leverage you've been waiting for.

The herd number is the one to watch

The reason we keep coming back to herd size rather than a single month's price is that it's the slower-moving, harder-to-fake number underneath everything else. A short-term price spike can come from weather or a one-week supply hiccup and unwind just as fast. A shrinking herd takes years to rebuild, because you can't conjure a milking-age cow into existence faster than a gestation and a rearing period allow. If cull rates keep running ahead of replacement, this spring's price firmness is more likely to be the start of a longer stretch than a one-season blip.

None of this is a forecast — we don't have one, and anyone who tells you they do is guessing with more confidence than the data supports. What we can tell you is what the underlying trend has been for several months running, and that trend argues for treating any current-quarter pricing as provisional rather than locked in.

If your make plan or your business plan for the back half of the year assumes flat milk costs, this is a good week to stress-test that assumption. And if you want a second set of eyes on a supply contract before you sign it, the Wholesale Negotiation webinar we ran this week is worth a listen — the recording will be up for members who missed the live session.

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The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.