The last number of years have been particularly difficult for the US dairy sector due to weak farmgate prices and dropping milk production in many important dairy states.

The persistent weakness in US milk prices over the last few years has resulted in large numbers of small family farms exiting dairying altogether, as the drive to scale accelerates at farm level.

However, US milk prices in 2020 have improved thanks to record at-home consumption of dairy as a result of the COVID-19 pandemic.

During the summer, US cheese prices hit an all-time record high, which has helped boost farmgate milk prices in 2020 for US dairy farmers.

Growth mode

This improvement in farmgate milk prices has steadied the recent declines in US milk production and halted the loss of family farms from dairying.

For the first time in a number of years, US milk production is now firmly in growth mode as farmers react to stronger milk prices.

For September, US milk production was up 2.3% year on year to just under 7.9bn litres. A 2.3% increase may not sound like a large increase, but for the US it means close to an extra 200m litres of milk in just one month.

For the first nine months of 2020 (January to September), US milk production stands at a cumulative 73.4bn litres, which is almost 2% ahead of last year. That’s an extra 1.3bn litres compared with the same period last year, which is a lot of extra milk.

If this pace of supply growth continues for the remaining months of 2020, the US is on track to exceed 97bn litres for milk production this year.