It's a traditionally slow month for the dairy industry, so Ted and T3 take a whirlwind tour of the state of the industry. Topics include potentially bad crop yields, slowing milk production, the trade situation with China and a dose of market psychology.

Anna: Welcome to The Milk Check, a podcast from T.C. Jacoby & Co., where we share market analysis and insights with dairy farmers in mind. It's early August and things are slow in the dairy industry. We're taking a step back to look at markets as they stand today and discuss where things might go from here.

We'll start by discussing feed. You don't need to be a feed expert to know it's been a hard year. T3, what's your understanding of the feed situation? And how might this year's issues affect milk production?

T3: You know, my understanding of the issues with feed are, you know, we've had a lot of rain, the corn that's in the ground is, for the most part, running behind and in some cases, we'll probably never catch up, they're just gonna run out of time.

Ted: It's running behind, the question is where it's running behind.

T3: Absolutely. You know, where we live in, in St. Louis and in the parts of Missouri and Illinois down by us is actually in pretty good shape. We're hearing that there are parts of Illinois that are not in as good as shape but the fields that I've seen are in good shape around here.

A couple of weeks ago though, I was up in Wisconsin, eastern side of Wisconsin between Madison and the lake and I saw a lot of really bad fields that were just in bad shape for, you know, for the second to last week in July, they weren't even up to my waist yet and they certainly weren't anywhere near getting ready to tassel.

Ted: Michigan is the same way. Northern Ohio, same way. Northern Indiana, same way.

T3: And I'm hearing Minnesota is the same way too. I'm hearing that northern Iowa might be struggling a little bit, but southern Iowa was in pretty decent shape. Here's where I'm going with that discussion. You know, a lot of the corn that turns into being feed for dairy cows is actually silage. What I'm actually hearing is the silage is not gonna be a problem, the dairy farmers are gonna have enough silage, and also due to tariffs and other things, brewer's grains and some of the other things that dairy farmers feed their cows, there's also gonna be an ample supply of.

And so, ironically, even though the corn is not looking good, the corn directly is not gonna be the problem, the problem is going to be that the same weather that's caused the corn to be behind has caused the pasture, whether it's hay or alfalfa or whatnot, is a major problem. That whether they're gonna get one or two fewer cuttings this year, and the quality of the cuttings they do get, it's a pretty big problem. And so it's very safe to say that feed quality is going to be an issue but the issues probably gonna be more an issue of feed quality than feed price.

You know, the basis has gone up and so maybe the feed costs a little bit more in various places but the bigger issue for the dairy farmer is gonna be feed quality in most parts of the country.

Ted: Well, that's a price-related factor.

T3: So that eventually will have a negative effect on milk production per cow. And so you've got cow numbers down, you know, I'm not ready to say milk production per cow is gonna be down because it's usually up a little bit every year but heifer numbers are down. We know that a lot of dairy farmers are breeding with Angus and other beef cows rather than Holsteins or Jerseys. The sense I get is that there's more, they're replacing out the Holsteins much more than they're replacing out the Jerseys.

Ultimately, you're gonna have a smaller number of heifers in the pipeline to eventually go into thei...