Covid-19 is roiling the United States dairy industry, reducing milk production and sending prices soaring.
Butter prices, for example, are 10 per cent higher than a year ago and milk powder production is the lowest in two years.
Added to worker shortages because of the Omnicron variant of COVID-19 is a spike in grain costs for cow rations.
Some farmers are culling their herds and the ones they keep are being fed less so they produce less milk.
Butter futures prices on the Chicago Mercantile Exchange are at the highest since 2017, while whey is the priciest since 2014. Cheese and milk contracts are the most expensive in more than a year.
Retail prices for milk are the highest since 2015, reports the U.S. Bureau of Labour.
The issue of declining output isn’t limited to the U.S. Milk production is weak across all major exporters, and demand is decent to strong, said Nate Donnay, director of dairy market insight at StoneX Group.
But things are holding steady in Canada where supply management has kept milk production flowing and prices steadily rising to cover costs of production.
Prices farmers are paid for fluid milk increased sharply on Jan. 1 and for milk to make products such as butter and cheese will increase Feb. 1.
They are the largest increases in more than a decade, but so, too, are cost increases such as grain for rations.
