A few weeks ago, the spot block cheese price exhibited unprecedented volatility. That settled down only to see volatility in the milk futures fueled by the uncertainty over the impact tariffs would have on the export market. Over the past few years, I have indicated that volatility will increase as time progresses and that certainly has been true and will continue to be true. The dairy markets will become increasingly reactive to both domestic and international news. The market is no longer what we see in our neighborhood, state, region, or country but the world. That is the reason volatility will remain significant. There will be times of stability, but those times may be brief.
Heifer prices have been increasing as the supply tightens. Some areas see replacements running up to $4,000 per head. The main reason for this is likely the desire to breed beef-on-dairy to supplement income. This has been a real benefit to dairy farms as these crosses are in demand from feedlots. Many farms have been breeding half of their cows to a beef cross as it is paying huge dividends. This has diminished the demand to cull heavily or the need to breed all of the cows to dairy bulls so one has sufficient heifers to maintain the dairy herd and some extra to sell.
By Robin Schmahl
February 14, 2025
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