Author: Michael Ferrari, PhD
VP, Applied Technology & Research
Looking at the June heat which spread across California’s central and southern valley milk producing regions towards the end of last month, we are factoring in the temperatures as a negative production impact. Many herd locations experienced between four and seven days where daily max temperatures were above 100°F (Chico, CA reached 107°F) with little or no rain, and our models estimate that this event alone will shave between 1% and 2% off of milk yields in this commercially important region. While the current pattern is benign, a potentially dry August (see western US forecast on map below) will extend the production/yield risk to the downside when we look at the annual production totals.
In a year where domestic supply remains tight due to a thinning of the herd size, we may be looking at strong Class III price support for the first half of 2011. The price chart above highlights the upside price risk (red line is the 200 day moving average).
*forecast map: Weather Trends International
*price chart: ino.com
