Dairy economist forecasts 23% price drop due to COVID-19
A dairy economist forecasts a more than 20 percent price drop because of COVID-19.
Nate Donnay with INTL-FCStone says he’s basing that off expenditures at grocery stores versus food service.
“And if we’re looking at something like a 40 percent decline in sales at restaurants for a three-month period, I think that would knock about three and-a-half percent off of total dairy demand in calendar 2020.”
He tells Brownfield that calculates to about a 23 percent reduction in dairy prices.
“So, we’re talking about farm-gate milk prices maybe being around $18-per hundredweight without coronavirus. Now with coronavirus, we’re talking about farm-gate prices down around $14 cwt.”
Because of the revised price outlook, Donnay expects Dairy Margin Coverage payments to be triggered again this year. He says it’s also possible the Trump Administration provides more aid to farmers as commodity prices follow financial markets lower.