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Milk prices reach new record levels
MISSISSIPPI STATE -- Dairy producers finally have good reasons to celebrate June, National Dairy Month, as milk prices reach record levels and their heifers bring top dollar.
"Milk prices are at unprecedented levels, about 20 percent greater than all-time record highs," said Bill Herndon, dairy economist with Mississippi State University's Extension Service. "Current prices are exceeding the $20 per hundredweight range. At this time last year, farmers were experiencing 25-year low milk prices of just over $11, so current prices are basically double what they were receiving in 2003."
Last year's record low milk prices influenced many dairy farmers to sell out of the business and now are part of the reason cattle numbers have been trending down. The unavailability of Canadian cattle since the case of bovine spongiform encephalopathy -- commonly known as mad cow disease -- was discovered also has reduced replacement numbers.
"Last year was the first time the national milk herd fell below 9 million cows, and it looks like we'll stay down," Herndon said.
Wesley Farmer, Extension dairy specialist serving south Mississippi, said milk prices are very sensitive to supply and demand, and fewer replacement heifers will help milk production stay down a little longer. While producers can earn top prices for heifers they want to sell, other farmers will be hit with greater expenses when purchasing replacements.
"When the demand for heifers is great, the price for those heifers is even greater," Farmer said. "The difference in cattle prices on the Canadian side of the border is like night and day from our market. In Canada, dairy cattle are selling dirt cheap."
Angelica Chapa, Extension dairy specialist, said prices for the best quality heifers and cows are running around $1,800. Lower quality cattle are closer to $1,000.
"With milk prices up, cows that normally would be culled will be kept longer. However, beef prices are also up, so selling is still an option," Chapa said. "When you have expensive cows, the tendency to expand is lessened unless producers can find good deals on herds going out of business."
Chapa said Mississippi is still experiencing herd losses because feed costs have been increasing and in some cases have off-set higher milk prices. The cumulative effect of the 18 months of low prices may be too much for some producers to overcome.
Mississippi had 31,000 dairy cows on 258 dairies at the end of 2003. In December 2000, Mississippi had 36,000 milk cows and 328 dairies.