Transcript

Intro
Welcome to Ag Smarter – The Dairy Feed, a podcast from the Ever.Ag team.

I’m Kathleen Wolfley, and I’m joined today, as always, by the one and only Jim Matthews.

It is 11:00 AM Eastern on March 10th, and Jim, we have a lot to talk about in the markets today. Plus, we’ll have a few Words from Wichita, and joining us live in the studio today is a fan favorite, Katie Burgess.

But before we get to all of that, Jim — what has your attention today?

Market Overview
You know, Kathleen, my commentary hasn’t changed much from what we discussed last week.

I spent a little time thinking about how much dairy actually goes into the Middle East from the U.S. In 2025 we saw substantial exports of butterfat into the region, and significant gains in cheese exports as well.

However, the U.S. still plays a relatively small role in supplying dairy to that region. Europe remains the dominant exporter.
That said, there is still risk for U.S. dairy exporters right now. Shipping lanes are a mess, for lack of a better term. So there’s certainly downside risk if global trade flows begin to shift.
Ultimately, there are still more questions than answers about how the situation will filter through global dairy markets.

Words from Wichita – Jake Kingsley

Hello everyone. I’m back in the home office after a quick trip through western Kansas and down into Amarillo to meet with dairy farmers and industry partners.The Texas Panhandle is extremely dry, and there is plenty of concern about the wheat crop and its need for rain to support feed production later this spring.

Dry conditions across the Plains and Midwest are beginning to draw more attention as planting season approaches.
The unofficial kickoff to planting season will be USDA’s Prospective Plantings Report, scheduled for March 31st.
But the primary focus of the market this week is the volatility created by the ongoing conflict in the Middle East.
Crude oil futures have led markets higher in recent days, and feed markets are feeling the effects.

Corn futures are trending alongside crude despite heavy fundamentals confirmed in the latest WASDE report.
Corn basis has softened in parts of the Midwest as futures prices pull bushels out of storage. However, rail-dependent markets should consider locking in basis needs for April and May, or even through September.

Fuel costs and rail transportation rates could quickly offset any improvement in futures prices.

At the origin level, soybean meal futures are benefiting from soy oil’s correlation with crude oil. Crushers are seeing improved margins from stronger oil prices and are producing significant byproduct volumes.

Many feed buyers already have protein basis locked in through the end of the feed year and are now preparing to secure opportunities for the next crop cycle if attractive offers appear in March or April.

Kathleen to Jim

Jim, is there anything you want to double down on from Jake’s comments? I certainly heard a lot about managing risk there.

Interview – Katie Burgess

We’re excited to welcome Katie Burgess, Dairy Market Advising Director with the Ever.Ag team.

Katie, what should producers know about the dairy markets right now?

Katie Burgess
Thanks for having me.

It has definitely been a volatile run in dairy markets over the past couple of weeks, although this week has been a little quieter so far.

Right now we have cheese around $1.63, which is a new year-to-date high. That said, it’s not necessarily a level that gets producers overly excited.

Butter remains above $2, and powder prices are sitting in the $1.60 range.

Compared to six or eight weeks ago, prices are certainly at better levels.

Class III futures recently reached new life-of-contract highs, and Class IV prices are back around $19.18.

However, there are still concerns.

With the volatility in the Middle East potentially pushing gas prices higher, that could impact consumer behavior — especially restaurant spending.

Export disruptions are also a concern.

On top of that, the latest milk production report shows U.S. dairy cow numbers at their highest level in more than 30 years.

Seasonally, milk production will increase as we move into spring. There is already a lot of milk in the West, especially in California and Idaho, and we expect more production in the Midwest and Northeast as well.

So supply remains heavy, and there are still big questions around how demand will hold up.

Cow Numbers and Slaughter

When we look at slaughter rates, the numbers have increased compared to last year.

However, January and February typically have the highest culling rates of the year.

Relative to the five-year average, culling is still fairly normal — possibly even a little light.

That suggests we haven’t turned the corner yet in terms of reducing the dairy herd.

January milk checks were difficult for many producers, but March milk checks should look much better, particularly for producers with Class II or Class IV exposure.

In some areas, base-excess programs may require producers to reduce herd size, particularly in California.

But we’re also hearing stories of strong demand for milking cows, with some simply changing ownership rather than heading to slaughter.

Risk Management
For producers managing risk, there’s an important deadline coming up.

The deadline to purchase second-quarter Dairy Revenue Protection (DRP) coverage is this weekend.
Current coverage levels are attractive:
• Class III coverage around $16.50
• Class IV coverage around $18.25

Just six to eight weeks ago, those levels would have been very appealing.

Premiums are currently around $0.20, making it a relatively inexpensive opportunity to protect price levels.
Producers should review existing coverage as well. Given the volatility over the last six months, some earlier layers may be at lower levels.

This could be a good opportunity to boost the overall average coverage level at a relatively low premium.

Closing

Thanks again to Katie Burgess for joining the show today.
And as always, great to hear from Jake Kingsley in Words from Wichita.

If you found this episode helpful, be sure to like, subscribe, and share it with a colleague who could use a little market clarity right now.

For Kathleen Wolfley and the Ever.Ag Insights team, thanks for listening.

We’ll see you next time on Ag Smarter – The Dairy Feed.