Missouri Dairy Business Update  
Volume 12, Number 3
March 2012

Milk Prices

According to Bob Cropp's Dairy Outlook, "In March, USDA increased its projected increase in milk production for 2012 from 1.4% to 1.8% and lowered its projected milk prices. USDA projects an average Class III price in the range of $16.35 to $16.95 compared to $18.33 last year, and the average All Milk price in the range of $17.60 to $18.20 compared to $20.13 last year.

Higher milk prices for the last half of the year will definitely depend upon the level of milk production. It will require a slowdown in the increase in milk production from current levels. This could very well happen for the second half of the year. The combination of lower milk prices for the first half of the year, high feed prices and favorable cow slaughter prices could encourage heavier culling of milk cows that could stop the increase in milk cow numbers. Reduced returns over feed costs could also reduce the increase in milk per cow. How 2012 crops develop will be a major factor for the outlook for feed prices later on this year. Also
weather will continue to be an important factor in the level of milk per cow this summer and fall. "

Futures on the Chicago Mercantile Exchange
3-21-2012 Mar Apr May Jun July Aug Sept Oct Nov Dec
Class III Milk (per cwt.) $15.64 $16.26 $15.55 $15.86 $16.31 $16.66 $16.80 $16.83 $16.43 $16.45
Class IV Milk (per cwt.) $15.48 $14.99 $15.06 $15.50 $15.95 $15.98 $16.05 $16.30 $16.43 $16.40
Butter (per lb.) $1.43 $1.48 $1.50 $1.55 $1.55 $1.57 $1.58 $1.60 $1.62 $1.61
Source: CME

Current USDA Milk Price Forecasts
3-15-2012 1st Q 2012 2nd Q 2012 3rd Q 2012 4th Q 2012
Class III Price $16.05 to $16.25 $15.50 to $16.00 $16.70 to $17.50 $17.15 to $18.15
Class IV Price $15.85 to $16.15 $15.30 to $15.90 $16.05 to $16.95 $16.20 to $17.30
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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