Missouri Dairy Business Update

Volume 12, Number 8
August 2012

Milk Prices

According to Bob Cropp's Dairy Outlook, "In anticipation of tighter feed supplies and higher feed prices some producers started to increase the selling off of milk cows. For example, for the third and fourth week of July dairy cow slaughter was 22% and 8.3% higher than for the same week a year ago. However, USDA’s report shows just 3 of the 23 reporting states with fewer cows in July than June and only 8 states with fewer cows than a year ago. July cow numbers were just 0.3% higher than a year ago. But, as fall approaches and producers have a better inventory of their feed situation cow numbers are likely to decline further and drop below year ago levels.

Looking ahead milk prices for at least the first half of 2013 could stay as high if not higher than milk prices for the last quarter of this year. Some are forecasting that the combination of fewer milk cows and small increases in milk per cow will keep milk production at a level to support $20 or even higher Class III prices for most of 2013. But, current Class III futures begin the year at $19.80 and drops below $19 by May. However, this could quickly change as we move ahead and more information comes available on what is going on with cow numbers and milk production."

Futures on the Chicago Mercantile Exchange
8-27-12 Aug Sept Oct Nov Dec Jan 13 Feb Mar Apr May
Class III Milk
(per cwt.)
$17.70 $19.20 $20.18 $20.10 $20.15 $19.81 $19.45 $19.20 $19.30 $18.94
Class IV Milk
(per cwt.)
$15.65 $18.19 $19.49 $19.97 $19.99 $19.10 $18.50 $18.25 $17.00 $17.00
Source: CME
Current USDA Milk Price Forecasts
8-27-12 3rd Q 2012 4th Q 2012 1st Q 2013 2013
Class III Price $17.25 to $17.55 $16.95 to $17.55 $16.15 to $17.05 $16.20 to $17.20
Class IV Price $15.30 to $15.70 $15.35 to $16.05 $15.25 to $16.25 $15.65 to $16.75
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

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