US milk futures contracts have collapsed to a six-year low as dairy farmers boost production amidst slowing consumption. Slowing Chinese demand, Russian bans on US milk, and Americans’ preference for alternative drinks have left dairy farmers feeling sour.
In addition to suffering through multi-year low prices for their product, dairy farmers are now facing rising feed costs. Since early April, milk futures prices have dropped 13% while corn and soybean prices have jumped by 11% and 17%, respectively.
Despite the negative outlook, dairy production has been rising this year, and is projected to reach a record 212.4 billion pounds of milk. Many fear that the high production levels could lead to even lower prices in the coming months.
For consumers, the milk glut is translating to low prices at the grocery store, which are averaging $3.16 per gallon.
Meanwhile, the excess supply is being soaked up by cheese producers, who now are sitting on the largest cheese hoard since the 1980’s.