Summer dairy slump resulting from more natural demand

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Summer dairy slump resulting from more natural demand

A dairy economist says the June slowdown in markets is likely tied to markets finding their new demand normal.

Rabo AgriFinance’s Ben Laine tells Brownfield foodservice demand has been in a honeymoon phase as more people have become vaccinated and restrictions are lifted, and the restocking phases is starting to dwindle.

“Now it’s more of just maintaining these levels rather than that initial demand surge, we’re seeing just a little bit of a cool down there,” he says.

There’s also more cheese processing in the country and more milk production.

“We’re in a situation where the markets aren’t going to be tight, they’re good, they’re relatively balanced, but we’re not going to be spiking up into the levels that we saw last year largely because we don’t have the same level of government support, too,” he explains.

Laine says margin volatility also persists with increasing feed costs and recommends dairy farmers manage risk on both the milk and crop side.

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