Missouri Dairy Business Update

Volume 15, Number 1
January, 2015

Milk Prices

According to Bob Cropp's January Dairy Outlook, "The January Class III price will be about $16.00 and will likely decline further being in the low $14’s March through May before slowly improving and reaching the $16’s last quarter of the year. The Class IV price has declined even more. The Class IV price peaked at $23.89 last August and declined to $16.70 by December. The Class IV price will be near $13.50 in January and not reach $14 until June and recovering to the low $16’s by November. The U.S. All Milk Price peaked at $25.70 last September, had declined to $20.30 by December and will be near $17.45 in January and in the 16’s March through May and reaching the $18’s by September. If this holds milk prices will average about $7 lower than 2014. It looks like there will be payments under the Margin Protection Program at least for those producers who signed up with margin protection above the $6 level. At this time the probability that margins could actually be below $6 is quite low. But, it is early in the year and milk prices are very sensitive to rather small changes in milk production, domestic sales and dairy exports. So the year could turn out quite different than what I just described particularly for the second half of the year. There is just a lot of uncertainty when projecting milk prices six months to a year out."

Watch the podcast: http://dairymarkets.org/PubPod/Podcast/Outlook/

Note: On January 29th, after these dairy outlooks were issued, NZ based Fonterra issued a press relase reducing its forecast milk volume by 3.3%, which raised US milk prices significantly.

Futures on the Chicago Mercantile Exchange
1-29-2015 Jan Feb Mar Apr May June July Aug Sept Oct

Class III Milk
($ per cwt.)

16.16 15.99 15.46 15.45 15.65 16.07 16.52 16.75 16.82 16.95

Class IV Milk
($ per cwt.)

13.48 14.20 14.90 15.50 15.40 15.87 16.24 16.59 16.52 16.56

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