There’s too much organic milk in the market
One possibility is that more organic milk will flow into conventional markets until a new organic dairy equilibrium develops.
The following excerpt is from the USDA’s Dairy Market News for the week of July 17 to 28. Read the complete newsletter here.
Projections by some large organic dairy processors are for about 5.5% growth in U.S. organic milk production during 2017. Growth closer to 1% would be closer to the comfort level of some processors in terms of expanding processing, distribution and sales.
There is some apprehension as to the ability of processing capacity and sales, both retail and wholesale, to absorb the entire increase. One possibility is that more organic milk will flow into conventional markets until a new organic dairy equilibrium develops.
Wetness, heat and imports
A trinity of variables in this equation are wetness, heat and imports. The quality and quantity of organic feed grown during the current growing season is yet to be determined as weather conditions play out. Growing conditions domestically have been challenged in a number of areas by nearly constant wetness. Other areas are affected by extreme heat.
Heightened attention to sourcing of organic feed imports has yet to ripen into certain import quantities for the year. The final outcome of the 2017 organic feed crop year is still to be determined and remains an uncertainty at this point.
For a number of organic dairy processors, efforts to recruit dairy producers to transition into organic have stalled. A number of previous recruits remain in the transition process and efforts are being made to accommodate them as they fully transition. Interest in signing new prospects is near zero. Very few dairy producers are scheduled to complete the transition process beyond the end of 2018.