Missouri Dairy Business Update

Volume 14, Number 11
November, 2014

Milk Prices

According to Bob Cropp's October Dairy Outlook, "Milk prices continue to show weakness from their peak back in September. Factors that are pushing milk prices lower include the increase in U.S. milk production, holiday orders by buyers of cheese and butter are about complete, and a continued decline in U.S. dairy exports. USDA’s estimate of U.S. milk production shows October production up 3.8% from a year ago, the result of 0.8 % more milk cows and 2.9% more milk per cow."

"World milk production continues well above a year ago for major exporters of dairy products, in particular New Zealand, Australia and the EU-28 countries. China has backed off from its very aggressive buying of dairy products on the world market earlier in the year (China was the second largest customer for the U.S.) as they have accumulated stocks of dairy products. The Russia/Ukraine issue where Russia has banned imports from the EU-28 has disrupted EU exports. The result of these factors has been a drop in world dairy product prices by about 50% from earlier in the year putting prices well below U.S. dairy product prices."

"The Class III price could be below $18 by January and in the low $17’s February through June. While earlier it looked like the Class III price could stay above $17 for all of 2015, a Class III price in the mid to high $16’s May through June could well happen before showing some strength for the last half of the year. Some are predicting a Class III price below $16 this summer which is possible if the increase in milk production runs a good 3% and exports are weaker."

 

Futures on the Chicago Mercantile Exchange
11-24-2014 Nov Dec Jan Feb Mar Apr May June July Aug

Class III Milk
($ per cwt.)

21.91 18.58 17.41 16.97 16.77 16.75 16.80 16.85 16.85 17.15

Class IV Milk
($ per cwt.)

18.35 17.33 16.14 15.55 15.18 15.08 15.25 15.61 16.23 16.72
Source: CME

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