Missouri Dairy Business Update  
Volume 10, Number 3
March 2010

Milk Prices

According to Robert Cropp's Dairy Outlook, "The Class III price declined to $14.50 for January, $14.28 for February, but will drop below $13.00 for March. Class III futures remain below $13.00 until June and only peak at $15.23 for September. Markets appear to have reacted negatively to the following factors: 1) Milk cow numbers, which declined month-to-month all of 2009, increased by 3,000 head in January, 2) January 1st cattle inventory showed dairy replacement numbers 2% higher than a year ago with a high ratio of 49.7 replacements per 100 milk cows, 3) Since the beginning of the year dairy cow slaughter has below a year ago (lower January numbers partially due to slaughter of CWT cows in 2009), 4) January 31st American Cheese Stocks up 1.8% from December and up 11.6% from a year ago, 5) Some softening of world product prices, 6) Continued softness in restaurant traffic which is not positive for cheese and butter sales, 7) After a strong recovery in nonfat dry milk/skim milk powder exports last quarter of 2009, January exports were down 41% from a year ago, and 8) In January USDA was projecting a second consecutive decline in milk production with 2010’s production down about a 0.7%; but, in March USDA revised their
projection to a slight increase in milk production

As of now the Class III price for 2010 may average around $14.45 and the All Milk Price around $16.20. While these average are an improvement over the 2009 averages of $11.36 for Class III and $12.81 for All Milk Price, dairy producers need better prices to build back lost equity. The probability appears higher for final average prices for 2010 to turn out higher than what is now projected than turning out lower."

Futures on the Chicago Mercantile Exchange
3-30-2010 Mar Apr May June July Aug Sept Oct Nov Dec
Class III Milk (per cwt.)
$12.78 $12.60 $13.33 $14.09 $14.57 $14.94 $15.22 $15.10 $14.94 $14.67
Class IV Milk (per cwt.)
$12.96 $13.41 $13.73 $14.33 $14.49 $14.63 $15.01 $14.88 $15.01 $14.67
Butter (per lb.)
$1.44 $1.47 $1.48 $1.51 $1.53 $1.54 $1.57 $1.57 $1.58 $1.60
Source: CME Group

Current USDA Milk Price Forecasts
1st Q 2010 2nd Q 2010 3rd Q 2010 4th Q 2010
Class III Price $13.83 to $14.03 $13.60 to $14.10 $14.45 to $15.25 $14.87 to $15.87
Class IV Price $13.17 to $13.47 $13.25 to $13.85 $13.95 to $14.85 $14.21 to $15.31
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

Historical Missouri milk prices may be found at: http://agebb.missouri.edu/dairy/mkt/index.htm

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