US milk production has continued to perform well in July, reaching 7.7bn litres, up 4% compared to July 2013.
However, according to DairyCo with the level of uncertainty in the market increasing in recent months, the question is how long will US production keep up the pace?
It says production this milk year (Apr-Jul) is currently 675m litres (2%) more than 2013, at 31bn litres. Conditions have largely been beneficial for US production, with, for instance, US wholesale prices (up to Jul 14) not experiencing the same levels of downward pressure as wholesale prices in other regions. This, combined with a reduction in feed costs, has meant that the milk to feed price ratio has been favourable to US farmers, increasing circa 60% between July 2013 and 2014.
However, DairyCo comment that given current market conditions, it is unclear as to whether US farmers will continue to push milk production over the rest of the year.
It points out while on one hand, the outlook for feed grain and oilseed prices is quite bearish, which may lead to reductions in feed costs in the future. On the other hand, the Russian ban is impacting on an already uncertain global market, which may translate through to US wholesale prices.
It comments that where the milk to feed price ratio goes in the coming months will be key in determining the future direction of US production.