Missouri Dairy Business Update  
Volume 10, Number 7
July 2010

Milk Prices

According to Bob Cropp's Dairy Outlook, "The Class III price was $13.62 for June and will be near $13.80 for July. The Class IV price for June was $15.45 and will weaken some to around $15.25 for July. Class III futures are still settling below $15.00 for the rest of this year and all of 2011. Cheese needs to reach at least $1.60 per pound to get the Class III price over $15.00 and at least $1.70 per pound for a Class III price over $16.00. Cheese near or above $1.60 is very possible by fall. But, milk production needs to show a slower growth rate. The 10th round of CWT will remove more than 34,000 cows which will help to reduce cow numbers. But, the more than ample supply of dairy replacements and cow slaughter running as much as 15% lower than a year ago in recent weeks does not help to reduce the cow herd. Corn prices have shown some strength, but soybean meal and hay prices are lower than a year ago. Thus, with improved milk prices (more than $4.00 per hundredweight higher than a year ago) and lower over all feed costs returns over feed costs are much more favorable. As a result, some dairy producers are producing all the milk they can to pay off accumulated expenses incurred during last year due to very depressed milk prices. Mandatory supply management bills have been submitted in the House and the Senate as well as other supply management proposals being offered. These bills and proposals establish a base milk production for each producer. Perhaps some dairy producers are maintaining a level of milk production to have a good milk base, if supply management does come into play."

Futures on the Chicago Mercantile Exchange
7-26-2010 July Aug Sept Oct Nov Dec Jan 11 Feb Mar Apr
Class III Milk (per cwt.) $13.74 $15.01 $15.40 $15.06 $14.82 $14.74 $14.49 $14.30 $14.45 $14.35
Class IV Milk (per cwt.) $15.37 $15.45 $15.50 $15.26 $15.10 $14.73 $14.39 $14.29 $14.35 $14.58
Butter (per lb.) $1.74 $1.80 $1.80 $1.76 $1.76 $1.65 $1.60 $1.57 $1.59 $1.58
Source: CME

Current USDA Milk Price Forecasts
7-21-2010 2nd Q 2010 3rd Q 2010 4th Q 2010 1st Q 2011
Class III Price $13.31 $13.90 to $14.30 $14.25 to $14.95 $14.00 to $15.00
Class IV Price $14.82 $15.55 to $16.05 $15.15 to $15.95 $14.45 to $15.55
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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