Market analyst Sarina Sharp, of Dairy Business News, joins The Milk Check crew to talk about the lacking rain in the West, labor shortages and demand expectations for the second half of the year.

While the drought won't drastically affect overall milk production, it will put Western dairy producers in a bind as feed prices and hauling rates increase. California producers also have to weigh the rising cost of scarce labor.

The crew also discusses issues like the accuracy of Class III price forecasts and how freight uncertainties continue to challenge exporting efforts.

T3: Welcome, everybody. Today's June 10th. And welcome to our June podcast recording. Today, we have a special guest and great friend, Sarina Sharp, who is the market analyst for The Daily Dairy Report. She also writes the Jacoby Weekly Market Report. And we spend a lot of time, you know, talking to Sarina about markets and getting her insight and what she thinks, and we thought it would be a great time to have her join us today.

One of the things that we've been reading a lot about, I woke up this morning and I read an article in "The Wall Street Journal" about the Western drought and how low Lake Mead is. It's like the lowest it's been since 1933, I believe. And it made me wonder how much this drought was going to affect the dairy industry.

So I think my first question for you, Sarina, and I know my dad has a bunch of questions for you, but how serious should the dairy industry be taking this drought that everybody's talking about?

Sarina: Well, like most weather issues, it's gonna be localized, but it will also have a national and an international impact. The thing to remember is that the drought is severe in the West and it will impact feed costs for dairy producers in the West, there are certainly some key dairy states there. But we've actually had really good rains in the Southern Plains, including in some large dairy states like Texas.

And then we have had good rains up until a few weeks ago in most of the Corn Belt. The Northern Plains are very dry as well. And it is just starting to get dry to an extent that it's a concern for farmers in Iowa, which has obviously a very big corn state. And then in the Northern tier of the Corn Belt, so Minnesota, Wisconsin, Michigan. Those latter three, those are not where you get your big, big crops. Minnesota is a very significant corn state, but Michigan much less so.

So the weather impact on feed prices, I think right now is actually less significant than the demand impact on feed prices. We just had the USDA crop report today and they estimate that we will use more than 15 billion bushels of corn in the current crop year, which ends September 1. That's by far a record high. We are planting a lot of corn acres this year, but feed costs are going up because of demand.

Getting back to the drought and its impact on dairy producers and to milk production, we will see feed costs rise because of the drought, but I don't think that the immediate impact will be less milk production. In fact, in the Southwest where a lot of cows are on dry lot pens, they're very comfortable. The heat would be a greater concern for their immediate impact on milk yield.

T2: Sarina, this is Ted. You know, for 50 years, we've been hearing about droughts in Western California, low water supplies, and the effect that it has on a dairy and feed for dairy and so on. So you have to almost excuse us for not being very concerned, but is there a real concern this time as opposed to the other times we've seen the reservoirs in California and in the Sierras go down a little bit at this time of the year and everybody has their heart i...