Missouri Dairy Business Update

Volume 13, Number 8
August 2013

Milk Prices

According to the Bob Cropp's August Dairy Outlook, "It now appears that milk prices will not peak as high this summer and fall as earlier predicted. Milk production in relation to domestic demand and exports is keeping milk prices lower."

"With higher milk production than a year ago dairy product production was also higher. Compared to last year June production of butter was 2.7% higher, American cheese 1.2% higher and total cheese 1.4% higher. June 30th stocks were also considerably higher than a year ago. Butter stocks were burdensome being 33.2% higher. American cheese stocks were 6.4% higher and total cheese stocks 4.9% higher."

"While current Class III futures show declining Class III prices from August on falling below $18 by September and ending in December below $17, there is still a chance that prices could do better than this. Milk production is declining seasonally, increases in milk production above a year ago are likely to be less than 2%, schools are opening which increases fluid milk consumption, and cheese and butter buyers need to start to build inventories to meet the strong seasonal sales period of thanksgiving through Christmas. In addition, dairy exports are forecasted to remain strong through at least the end of the year. All of these factors ought to strengthen cheese prices in the weeks ahead. While my earlier prediction for the Class III price to reach $19 this fall now seems unlikely, a Class III price in the high $18’s by October could still be possible."

 

Futures on the Chicago Mercantile Exchange
8-28-2013 Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Class III Milk
($ per cwt.)

17.89 17.79 18.05 17.60 17.05 16.59 16.35 16.28 16.23 16.27

Class IV Milk
($ per cwt.)

19.15 19.42 19.55 19.40 18.55 17.70 17.35 17.20 16.76 16.98
Source: CME
Current USDA Milk Price Forecasts
August 2013 3rd Q 2013

4th Q 2013

1st Q 2013 2014
Class III Price 17.75-18.05 17.95-18.55 16.35-17.25 16.55-17.55
Class IV Price 18.75-19.15 18.05-18.75 17.00-18.00 17.65-18.75
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

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