Missouri Dairy Business Update  
Volume 11, Number 11
November 2011

Milk Prices

According to Bob Cropp's Dairy Outlook, "USDA's latest milk production report was not bullish for milk prices. USDA estimated October milk production up 2.1% from a year ago, the result of 1.1% more milk cows and 1.0% more milk per cow. Milk cow numbers continue to increase despite cow slaughter compared to a year ago averaging 4.3% higher January through October. The number of dairy replacements averaging 45.6 per 100 milk cows as of July 1st is much more than what is needed to maintain the size of the nation's cow herd under normal culling. October cow numbers were 9,000 head higher than September and 78,000 head higher than last December."

"With projected lower milk prices margins for milk production will be lower in 2012. Lower margins ought to stop the growth in the nation's cow numbers and dampen the increase in milk per cow. USDA is forecasting a 1.4% increase in total milk production for 2012. Such an increase could keep the Class III price in the range of $16.30 to $17.25 for any given month in 2012"

Futures on the Chicago Mercantile Exchange
11-28-11 Nov Dec Jan 12 Feb Mar Apr May Jun July Aug
Class III Milk (per cwt.) $19.11 $18.77 $17.50 $16.90 $16.82 $16.77 $16.73 $16.72 $16.98 $17.07
Class IV Milk (per cwt.) $18.00 $17.25 $17.15 $16.92 $16.90 $16.90 $16.70 $17.00 $17.05 $17.00
Butter (per lb.) $1.76 $1.63 $1.65 $1.65 $1.68 $1.715 $1.73 $1.75 $1.76 $1.78
Source: CME

Current USDA Milk Price Forecasts
11-16-2011 4th Q 2011 1st Q 2012 2nd Q 2012 3rd Q 2012
Class III Price $18.35 to $18.65 $17.30 to $17.90 $16.00 to $16.90 $17.05 to $18.05
Class IV Price $18.00 to $18.40 $16.85 to $17.55 $16.35 to $17.35 $16.35 to $17.45
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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