Dairy futures climbed sharply higher out of the gate on Monday, with prices pushing back to the top end of their wide trading range. May Class III futures traded about 2 percent higher by midday, rising above $17.50 per cwt, continuing last week’s gains.

Class III dairy milk futures finished 58 points higher on the week after Friday’s close. U.S. dairy futures have been extremely volatile since bouncing from contract lows in late January.

U.S. milk production totaled 18.26 billion pounds in February, up 3.1 percent year-over-year, according to the USDA’s monthly Milk Production report. The increase was due to a 3 percent jump in the milk cow herd compared to a year ago. Milk per cow was mostly steady.

January through February production totaled 38 billion pounds, sitting 3.2 percent higher than a year ago and a record for the period. Historically high milk cow numbers are expected to keep domestic milk production at a record throughout the year.

The dairy industry is undoubtedly in an expansion phase as the number of milk cows continues to climb. Herd size and efficiency are the two levers driving domestic milk production to records. The latest data showed that there are 211,000 more milk cows compared to last year.
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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.