Missouri Dairy Business Update

Volume 14, Number 5
May 2014

Milk Prices

Pod cast: http://dairy.wisc.edu/PubPod/Podcast/Outlook/Index.html

According to Bob Cropp's May Dairy Outlook, "USDA’s milk production report for the month of April shows production continuing to increase above year ago levels at a relatively slow pace of 1%. Milk cow numbers are also increasing at a slow pace. Milk cow numbers increased by 10,000 head from last month and by just 23,000 head since numbers began increasing last December. Forage quality and the effect of a very cold winter appear to continue to negatively impact milk production in the Upper Midwest."

"We can expect the growth in milk production to pick up as we move through the year. Average returns over feed costs for April were $13.85 per 100 pounds of milk compared to $6.09 a year ago (calculated with 2014 Farm Bill margin protection formula). These favorable margins encourage feeding cows for higher milk production. We will likely see a slow increase in the number of milk cows as we move through the year both from adding cows and keeping some cows that normally would be culled. Thus far this year the number of slaughtered dairy cows is more than 10% lower than a year ago. Also, as new and better quality forages become available we can expect milk per cow to improve, particularly in the Midwest states."

"With expected stronger growth in milk production and some softening of dairy exports milk prices will slowly decline but remain at a good level historically. The Class III price could fall below $20 by August or September and be in the mid $18’s by December. If this holds true, the average Class III price for the year will be near $21 compared to $17.99 for 2013 and the U.S. All Milk Price will average near $23 compared to $20.05 for 2013."

Futures on the Chicago Mercantile Exchange

May 2014

June 2014

July 2014 Aug 2014 Sept 2014 Oct 2014 Nov 2014 Dec 2014 2015 Average 1st Q 2016

Class III Milk
($ per cwt.)

22.53 20.58 20.24 20.15 20.28 20.04 19.50 19.00 18.13 16.34

Class IV Milk
($ per cwt.)

22.70 22.55 22.30 22.09 21.94 21.55 21.19 20.59 17.57 16.98
Source: CME

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

Global Dairy Trade Prices: https://www.globaldairytrade.info/en/