Missouri Dairy Business Update  
Volume 11, Number 8
August 2011

Milk Prices

According to Bob Cropp's Dairy Outlook, "With high feed prices increases in milk production of no more than 1% seems likely for the remainder of the year. High feed prices will hold down increases in milk per cow. With lower milk prices the returns over feed costs with decline and this will likely increase cow slaughter. The result will help to hold milk prices at relatively higher levels. By the end of the year both the Class III and Class IV prices could be in the $17 to $18 range and the U.S. All Milk price in the $18 to $19 range. However, there are some who are forecasting lower prices due to a sluggish U.S. economy affecting domestic demand and lower dairy exports. Lower prices are definitely possible. But, if prices turn out much lower both the number of cows going to slaughter and producers deciding to exit the business would likely increase adjusting downward the level of milk production and adjusting milk prices upward."

Futures on the Chicago Mercantile Exchange
8-28-2011 Aug Sept Oct Nov Dec Jan 12 Feb Mar Apr May
Class III Milk (per cwt.) $21.58 $18.64 $18.48 $18.29 $18.00 $17.28 $16.99 $16.99 $16.93 $16.92
Class IV Milk (per cwt.) $20.00 $19.35 $18.55 $18.04 $17.75 $17.30 $17.25 $17.20 $16.51 $16.25
Butter (per lb.) $2.07 $2.05 $2.01 $1.92 $1.85 $1.75 $1.75 $1.78 $1.77 $1.80
Source: CME

Current USDA Milk Price Forecasts
8-30-2011 2nd Q 2011 3rd Q 2011 4th Q 2011 1st Q 2012
Class III Price $17.50 $20.00 to $20.40 $17.95 to $18.65 $15.90 to $16.90
Class IV Price $20.37 $20.05 to $20.55 $18.15 to $18.95 $16.70 to $17.80
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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