DAIRY NEWS – With finances and the economy being at the forefront of many conversations among dairy farmers, the opening session of the 2016 PDPW Business Conference offered attendees a glimpse into global markets and where those trends will take the industry. Dan Basse, President of AgResource Company, kicked off the educational event by discussing these trends with a large crowd of dairymen gathered at the 24^th Annual Business Conference in Madison, Wis.   
 

“With grain production now rising faster than demand and the U.S. Ethanol industry reaching maturity, it is of growing importance to consider global factors that impact your bottom line as dairymen,” Basse says. “These factors coupled with the 7.4% increase in milk production over the last three years and new technologies for improved efficiencies make increasing export markets a must for balancing supply and demand.”

Basse adds that agricultural investments in seed genetics and agronomy in the past 10 years has enabled greater yield stability during adverse weather, while the rising U.S. dollar is fanning grain production in non-U.S. export regions like Russia, Ukraine, Brazil, Argentina, Australia and Canada. Furthermore, interest in dairy production in Argentina is growing and the country is poised to become a larger player in the export market as grain and meat export taxes has been abolished. Thus, the growing need to address the balance of supply and demand.

To help manage the oversupply issue facing the industry over the past decade, Basse cites several strategies. The first is the need to focus on areas of projected expanding populations such as India, China, Pakistan and Bangladesh to enhance U.S. export markets.

“Butterfat remains the story for U.S. milk margins and McDonald’s shift from margarine to butter and their all day breakfast menu is increasing U.S. butter demand,” Basse continues. “Capitalizing on that butterfat market will assist with milk margins as the butter outlook continues to find support of $1.90 to $2.00 per pound with seasonal rallies over $3.00 per pound.”

In conclusion, Basse reminded the large group of attendees that while oversupply, adverse weather and export changes are all impacting farm income, knowing global trends and remaining optimistic are keys to success.

“The themes for 2016 revolve around low price targets for grain and feed, optimism for more possible demand from China in the upcoming year, increase demand for butterfat and the growing importance of government policy in agriculture producing countries moving forward,” he concludes, “Keep in mind it is a cycle ladies and gentleman, one that will get better.”

More highlights from the conference are available at www.pdpw.org.

Professional Dairy Producers of Wisconsin is a dairy-producer founded organization that provides educational programs and services to fellow dairy producers. PDPW’s mission is “to share ideas, solutions, resources, and experiences that help dairy producers succeed.”
 

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