Missouri Dairy Business Update  
Volume 11, Number 9
September 2011

Milk Prices

According to Bob Cropp's Dairy Outlook, "Milk prices are showing some weakness from record levels set in August but remain well above year ago levels. The August Class III was a record $21.67, will decline to around $18.95 for September compared to $16.26 a year ago. The August Class IV price was $20.14, will decline to around $19.65 for September compared to $16.76 a year ago

The rate of growth in milk production for the remainder of 2011 and the winter of 2012 is not likely to increase but ought to slow. If the rate of increase in milk production does not fall back to less than 2%, the cheese, butter, nonfat dry milk prices and resulting Class III and Class IV prices shown above could be a little optimistic. Very high feed prices along with these likely lower milk prices ought to encourage heavier culling of dairy herds and less grain and concentrate being fed which would dampen increases in milk per cow. Alfalfa hay prices are up substantially for Western states. Corn prices are averaging about 81% higher than a year ago and soybean prices 28% higher. Dairy cow slaughter thus far this year is 4.6% higher than a year ago and is likely to increase. But, milk prices may still average lower the last quarter of this year and into 2012 due to a sluggish economy holding back any strong increase in domestic milk and dairy product sales."

Futures on the Chicago Mercantile Exchange
9-26-2011 Sept Oct Nov Dec Jan 12 Feb Mar Apr May Jun
Class III Milk (per cwt.) $19.01 $17.65 $17.36 $17.07 $16.80 $16.69 $16.68 $16.38 $16.46 $16.70
Class IV Milk (per cwt.) $19.65 $18.39 $18.00 $17.69 $17.40 $17.15 $17.15 $17.00 $17.00 $17.00
Butter (per lb.) $1.99 $1.78 $1.76 $1.72 $1.72 $1.73 $1.76 $1.77 $1.82 $1.80
Source: CME

Current USDA Milk Price Forecasts
9-16-2011 3rd Q 2011 4th Q 2011 1st Q 2012 2nd Q 2012
Class III Price $20.45 to $20.65 $18.45 to $18.95 $16.35 to $17.15 $15.45 to $16.45
Class IV Price $19.80 to $20.10 $18.20 to $18.80 $16.75 to $17.65 $16.45 to $17.55
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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