Missouri Dairy Business Update

Volume 14, Number 7
July 2014

Milk Prices

According to Bob Cropp's July Dairy Outlook, "Compared to a year ago U.S. milk production was estimated to be up 1.5% for May and 1.9% for June. These are relatively strong increases considering a year ago May production was running 1.2% above the previous year and June’s production was 1.6% higher. Dairy producers are also adding milk cows. Dairy cow slaughter is 11% lower than a year ago thus far this year. No doubt more dairy replacements are being brought into the herd as well. Milk cow numbers started to increase last December, increased by 11,000 head in June and by 64,000 head this year."

"Lower world prices will put downward pressure on U.S. prices in order to maintain dairy exports. Current Class III futures fall to $19.09 by December and stay well above $18 through first quarter of 2015. The Class IV price falls to $18.95 by December and remains well above $18 for first quarter of 2015. If the increase in milk production picks up as anticipated and world prices puts some downward pressure on U.S. dairy product prices, these dairy futures prices may be a little optimistic. But that said no sharp decline in prices well below $18 is anticipated in the foreseeable future."

Futures on the Chicago Mercantile Exchange
7-23-2014 July Aug Sept Oct Nov Dec Jan Feb Mar Apr

Class III Milk
($ per cwt.)

21.52 21.80 20.98 20.21 19.64 19.28 18.54 18.14 18.10

18.01

Class IV Milk
($ per cwt.)

23.51 23.75 22.35 21.20 20.00 19.00 18.76 18.30 18.22 18.31
Source: CME

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