Missouri Dairy Business Update

Volume 15, Number 2
February, 2015

Milk Prices

According to Bob Cropp's February Dairy Outlook, "Milk prices continue to fall in 2015. The February Class III price will be near $15.55 compared to $16.18 in January and $17.82 last December. The Class III price February a year ago was $23.35."

"There exists considerably uncertainty as to how milk prices will end up for the rest of the year. A month ago there were predictions for the Class III price to fall to the low $14’s first quarter of the year and not reaching into the $16’s last half of the year and averaging about $7 lower than last year. Class III futures also showed this pattern. But, dairy futures have rallied. Currently Class III futures stay in the $15’s through May, and in the $16’s through July, and the $17’s for the remainder of the year. Class IV futures have also strengthened. Class IV futures are in the $15’s to may, $16 for June and in the $17’s for the remainder of the year. The explanation for this rally is the drought in New Zealand and New Zealand’s forecast for their milk production to be 3% lower in 2015. New Zealand is the single country leading exporter of dairy products."

"World dairy product prices appeared to have bottomed out and are now improving, but remain lower than U.S. prices. So U.S. dairy exports are not likely to show improvement until the last half of the year. We know milk prices react rather quickly to any bearish or bullish news on what is going on with milk production, domestic sales and exports. So milk prices can and will no doubt change as these factors change as we move through the year."

Futures on the Chicago Mercantile Exchange
2-25-2015 Mar Apr May June July Aug Sept Oct Nov Dec

Class III Milk
($ per cwt.)

15.37 15.21 16.64 16.37 17.01 17.45 17.47 17.54 17.50 17.20

Class IV Milk
($ per cwt.)

14.96 15.47 15.88 16.08 16.84 17.10 17.25 17.35 17.35 17.35

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