Dairy Is On a 16-Month Heater, Corn Prices Are Falling With Oil Prices

On today's podcast the dairy industry is on a 16-month track of higher YOY production. On the other hand, corn prices continue to stumble as oil prices fall as well. 

Transcript

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Well and welcome back to Chapp E DC. We got your three articles pulled up for today, which is Thursday, May 28th. We're gonna focus on a deeper dive into dairy markets. We are lower again in corn markets, and oil prices took a dip as well. So let's get to it. Starting out in dairy, we reported on the latest U.S. milk production report back on Monday. But Karen Bonert with Dairy Herd Management offers greater insight and perspective in her most recent column. U.S. dairy industry is currently rewriting the record books. What began as a steady recovery has transformed into generational expansion, marked by a relentless 16-month streak of production growth that hasn't been seen in more than a decade. As the industry looks toward the second half of 2026, the data suggests cowpower is back in a big way, driven by a rare alignment of herd expansion, technological efficiency, and regional shifts. According to the latest May USDA milk production report, the industry is in the midst of a historic run. For 16 consecutive months, milk production has climbed year over year, marking the longest sustained growth period since 2014. But it just isn't the duration of the streak that's catching the eyes of analysts, it's the intensity. During this period, production has increased by an average of 2.9% year over year. To find a similar multi-month streak of that magnitude, you have to look back more than two decades to 2003. Primary driver behind the surge is a sustained increase in the cow numbers. For 19 straight months, cow numbers have risen year over year. As of April 2026, the total number of milk cows on U.S. farms reached 9.65 million head, an increase of 190,000 head compared to April 2025. This expansion is not without a massive investment in infrastructure. Between March and April alone, the industry added another 10,000 cows to the national tally. Cowpower provides the physical capacity to maintain high output levels, even as individual farm managers navigate fluctuating prices. While cow numbers is the engine, the fuel is the increasing efficiency of the U.S. dairy cow. In April 2026, production per cow in the U.S. averaged 2,069 pounds. That's a 14-pound increase over last year. If you put this gain per head multiplied across a herd of 9.65 million, that's a staggering 20 billion pounds of milk produced in April alone. This 2.7% total increase in volume reflects a dual threat growth strategy. More cows and more milk per cow. Karen goes on to talk about growth areas, including the Kansas phenomenon, the Texas powerhouse, and the ongoing growth in the I-29 corridor. While we won't get into the specific details here, I do encourage you to check out Karen's article on DairyHerd.com to get the full report. Switching over to beef markets, real quick, I wanted to give a shout out to the guys at Barn Talk Podcast and their latest interview with John Haskell, who is an accomplished rancher and business owner and an expert at turning around struggling ranches. Listen to the podcast this week, and John just gives a terrific overview of ranch economics and has some really innovative views on how to be profitable on a cow calf operation. I encourage you to check out the Barn Talk Podcasts or whatever podcast service you prefer. Switching over to commodity markets, corn futures are lower again on Wednesday following the easing crude oil market as Iran peace talks continue to progress. Michelle Rook had the story on AgWeb in the article, Dwayne Bossey of Bolt Marketing says it sounds like overnight Iran was going on their local television and saying that the war was basically settled. Seems like the market feels like the war is generally over, so energy prices are going down and that takes a little bit out of the corn market. Bossi says planting progress on corn was at 86% nationally on Tuesday and ahead of the five-year average. But weather looks a bit bearish. He says what this crop needs is hot, dry weather, so emergents can get caught up and then to finish planting in the northern plains. The article, Bossi, says funds that are extremely long and are going to start to be nervous and liquidate in the corn market. He says funds don't have a lot of reasons to stay long in the market, except for fear of a weather problem or lower acreage. He says that if ten days from now, if we're still hot and dry, maybe we could add a little premium back in, but if that slips to above normal precipitation and crop is in the ground, funds won't want to stay long anymore, especially as China isn't going to be buying anytime soon. Wrapping up in financial markets, U.S. crude oil prices, as we said, trimmed losses Wednesday after the White House dismissed as a complete fabrication, and Iran State Meter report on the details of a framework deal. West Texas intermediate futures tumbled nearly 4% to $90.19 a barrel. International benchmark Brent oil slid more than 3% to $96. Earlier, Iranian state television said Tehran had committed to restore commercial traffic through Hormuz to pre-war levels within one month of an agreement with the U.S., according to Reuters. That report pushed the U.S. benchmark below $90. The report, which envisioned Iran managing ship traffic through the strait with cooperation from Oman comes as negotiations are ongoing. President Trump also is preparing to meet with his cabinet. But the White House said in a social media post that the report about a memorandum of understanding was, quote, a complete fabrication, end quote. Well, that's all for now. As always, thanks for tuning into ChatBDC. Please leave a comment, subscribe, share, and tell all your friends you're back tomorrow with more news across Agate Financial Markets. Until then, I'm Mike Offman and goodbye for now.