Missouri Dairy Business Update

Volume 14, Number 3
March 2014

Milk Prices

According to Bob Cropp's January Dairy Outlook, "The February Class III price was a record $23.35 and will be near that for March. The February Class IV price was a record $23.46 and will be near $23.60 for March. The February average U.S. All Milk Price was a record $24.70 and will average near $25 for March."

"Domestic sales and exports have tightened stocks of dairy products. The latest stock report is for January 31st stocks. Compared to a year ago butter stocks were 33% lower, American cheese stocks and total cheese stocks were both 2% lower. Nonfat dry milk stocks were 25% lower and dry whey stocks 8% lower."

"California’s milk production continues to improve after production declining 1.3% last year. Compared to a year earlier California’s milk production was up 4.4% in January and 5.3% in February. California has added milk cows and improved milk per cow. The severe drought is not impacting milk production at this time."

"Milk production is also improving in the major exporting countries of the EU-28, New Zealand, and Argentina with Australia the exception. So more dairy products will be available for export. But, with current world stocks of dairy products rather tight and world demand remains strong led by China it will take some time to rebuild stocks. U.S. exports may slow the last half of the year but yet total 13% to 14% of U.S. milk production on a total solids basis for the year."

"So we can expect milk prices to average lower for the second half of the year, but no sharp decline in milk prices is anticipated. The Class III price which now is over $23 is likely to be in the $20 to $19 range by early summer and end the year near $18. If this holds the Class III price for the year will average well over $19 compared the average of $17.99 last year. The U.S. All Milk Price will average over $21 compared to $20.01 last year. Current Class III futures are at levels that would support prices even a little higher than this."

Futures on the Chicago Mercantile Exchange
3-24-2014 Mar Apr May June July Aug Sept Oct Nov Dec

Class III Milk
($ per cwt.)

23.31 24.05 22.07 20.84 20.53 20.19 19.76 19.43 18.97

18.62

Class IV Milk
($ per cwt.)

23.60 23.36 23.39 21.45 21.07 20.69 20.45 19.94 19.71 19.33
Source: CME

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