Missouri Dairy Business Update  
Volume 11, Number 12
December 2011

Milk Prices

According to Bob Cropp's Dairy Outlook, "The December Class IV price will be near $17 down from $17.87 in November. The average for the year will be near $19 compared to $15.09 in 2010. With higher average Class III and Class IV prices the U.S. All Milk Price with average near $20 for the year compared to $16.26 in 2010.

How milk prices play out in 2012 depends heavily upon the level of milk production and the level of dairy exports. Lower milk prices for the start of the year along with relatively high feed cost could stop the increase in cow numbers and dampen increases in milk per cow. USDA's outlook report for November milk production showed cow numbers declined only slightly for the past two months, down 4,000 head from September, but still 1.0% more than a year ago. Compared to a year ago November milk production was 2.2% higher for the 23 reporting states and estimated 1.8% higher for the U.S. The increase in milk per cow continued to run below normal trend at just 0.8%.

USDA expects dairy exports to decline some, especially for cheese and butter, but yet remain favorable. If this holds and milk production slows milk prices could well improve the second half of 2012, but are likely to still average below 2011 for the year."

Futures on the Chicago Mercantile Exchange
12-19-2011 Dec Jan 12 Feb Mar Apr May Jun July Aug Sept
Class III Milk (per cwt.) $18.71 $17.30 $17.34 $17.19 $16.99 $16.95 $17.00 $17.10 $17.18 $17.19
Class IV Milk (per cwt.) $17.05 $16.91 $16.95 $17.00 $17.01 $17.00 $17.05 $17.10 $17.03 $17.00
Butter (per lb.) $1.63 $1.61 $1.64 $1.66 $1.69 $1.70 $1.72 $1.74 $1.76 $1.76
Source: CME

Current USDA Milk Price Forecasts
12-15-2011 4th Q 2011 1st Q 2012 2nd Q 2012 3rd Q 2012
Class III Price $18.50 to $18.70 $17.45 to $17.95 $16.25 to $17.05 $17.25 to $18.25
Class IV Price $17.50 to $17.80 $16.45 to $17.05 $16.30 to $17.20 $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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