Missouri Dairy Business Update

Volume 12, Number 4
April 2012

Milk Prices

According to Bob Cropp's Dairy Outlook, "With more milk, more dairy product production and more stocks dairy product prices have been depressed. Lower dairy product prices results in lower milk prices. The March Class III price was $15.72 compared to $19.40 a year ago. The Class III price for April will also be near $15.70. The March Class IV price was $15.35 compared to $19.41 a year ago. The Class IV price for April will be lower near $14.85.

With lower milk prices, high feed costs and favorable cow slaughter prices one would expect the growth in milk production to slow down and add strength to milk prices for the second half of the year. How weather impacts crop conditions and milk per cow this summer will also be an important for what milk prices do the second half of the year. Current dairy futures show a very modest price recovery. Class III futures fall to a low of $14.75 for June, don't reach $16 until September and remain in the low $16's for the remainder of the year. Class IV futures are below $15 through July and only peak at $16.15 for November. A stronger price rally than this will require a continued modest growth in domestic sales, relatively strong dairy exports and slowing down the growth in milk production closer to 2%. But, with the continued increase in milk cow numbers and above normal increases in milk per cow the probably is not good for milk prices to end up a lot better than what current milk futures show."

Futures on the Chicago Mercantile Exchange
4-20-2012 Apr May Jun July Aug Sept Oct Nov Dec Jan 13
Class III Milk
(per cwt.)
$15.77 $15.15 $14.65 $15.19 $15.90 $16.25 $16.20 $16.13 $16.03 $15.90
Class IV Milk
(per cwt.)
$14.83 $14.49 $14.53 $14.80 $15.14 $15.40 $16.05 $16.15 $16.00 $15.26
Butter
(per lb.)
$1.455 $1.415 $1.437 $1.475 $1.495 $1.510 $1.535 $1.555 $1.567 $1.562
Source: CME
Current USDA Milk Price Forecasts
4-16-2012 1st Q 2012 2nd Q 2012 3rd Q 2012 4th Q 2012
Class III Price $16.28 $15.45 to $15.85 $16.35 to $17.05 $16.30 to $17.30
Class IV Price $15.94 $14.70 to $15.20 $15.20 to $16.00 $15.55 to $16.65
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

Historical Missouri milk prices may be found at: http://agebb.missouri.edu/dairy/mkt/index.htm