Missouri Dairy Business Update  
Volume 11, Number 3
March 2011

Milk Prices

According to Robert Cropp's Dairy Outlook, "Farm milk prices have shown strong increases since the beginning of the year. Class III increased from $13.48 in January to $17.00 in February and will be above $19.00 for March. Class IV increased from $16.42 in January to $18.40 in February and will be near $19.70 for March. The U.S. Average All Milk price increased from $16.70 in January to $18.40 for February and will be near $19 for March. But, these prices most likely will be the peak for the year. It now looks like the Class III price will be well below $17 by April and could be in the low $16’s from May to early fall and then recover to the high $16’s or higher.

Milk production is likely to show relatively smaller increases as we approach summer. Corn prices remain at high levels. February hay prices at the national level are 15% higher than a year ago with prices up as much as 56% in California and 39% in Idaho. With lower milk prices returns over feed costs will be squeezed encouraging increase herd culling and reduced grain and concentrate feeding. With 3% more replacement heifers to calve this year the average number of milk cows for the year may not decline from last year, but a smaller increase in milk per cow could hold the increase in total milk production for the year below 2%. Then if domestic sales can continue to show growth as well as favorable dairy exports, Class III prices will strengthen the last half of the year reaching at least the high $16’s. Summer weather conditions for cow comfort and growing conditions for crops will also be an important factor determining were milk prices will be later this year."

Futures on the Chicago Mercantile Exchange
3-28-2011 Mar Apr May June July Aug Sept Oct Nov Dec
Class III Milk (per cwt.) $19.44 $17.04 $17.44 $17.29 $17.65 $17.76 $17.81 $17.45 $16.81 $16.80
Class IV Milk (per cwt.) $19.60 $20.21 $20.09 $20.10 $20.05 $20.06 $19.39 $18.94 $18.15 $17.60
Butter (per lb.) $2.07 $2.04 $2.00 $2.01 $2.00 $2.00 $2.02 $1.99 $1.95 $1.87
Source: CME

Current USDA Milk Price Forecasts
3-16-2011 1st Q 2011 2nd Q 2011 3rd Q 2011 4th Q 2011
Class III Price $16.45 to $16.65 $17.40 to $17.90 $16.10 to $16.90 $15.45 to $16.45
Class IV Price $18.00 to $18.30 $17.90 to $18.50 $16.50 to $17.40 $15.45 to $16.55
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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