Missouri Dairy Business Update

Volume 12, Number 7
July 2012

Milk Prices

According to Bob Cropp's Dairy Outlook, "The milk price outlook beyond July and for the first half of 2013 is much higher than what was projected earlier. The final feed supply situation and feed prices for this fall and winter will be major factors determining how high milk prices will go. Class III futures have the August Class III
at $17.72, increasing to $18.75 by September and staying well above $18 through May of 2013. Class IV futures are $15.75 for August, above $16 for September through December and then staying at $15.50 or higher through May of 2013. Could prices go even higher? The answer is yes, but higher prices could dampen both domestic sales and dairy exports that could hold down higher prices. Record dairy exports accounting for 13% of milk production on a total solids basis last year was a major factor for the Class III price reaching a record $21.67 in August of last year. So exports will remain a major factor as to whether $20 plus Class III prices could
happen later this year and into 2013."

Futures on the Chicago Mercantile Exchange
7-23-12 July Aug Sept Oct Nov Dec Jan 13 Feb Mar Apr
Class III Milk
(per cwt.)
$16.67 $17.96 $19.14 $19.08 $19.04 $18.96 $18.84 $18.50 $18.30 $18.25
Class IV Milk
(per cwt.)
$14.45 $15.75 $16.70 $16.65 $16.43 $16.26 $15.90 $15.90 $15.50 $15.50
Source: CME
Current USDA Milk Price Forecasts
7-17-12 3rd Q 2012 4th Q 2012 1st Q 2013 2013
Class III Price $16.35 to $16.75 $15.90 to $16.60 $15.25 to $16.25 $16.25 to $17.25
Class IV Price $13.90 to $14.40 $14.60 to $15.40 $14.65 to $15.75 $15.40 to $16.50
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

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