Missouri Dairy Business Update

Volume 15, Number 7
July 2015

Milk Prices

According to Bob Cropp's July Dairy Outlook, "For the past couple of months there were reports that plant capacity of cheese plants in the Northeast and Midwest was being stretched with the relatively strong increase in milk production. In fact, some milk was dumped in the Northeast due to lack of capacity. Yet cheese prices were holding up due to strong sales to fast food restaurants and by other end users and cut and wrap operations. Stocks last year were reduced to low levels and end users and cut and wrap operations had been rebuilding stocks. Over all cheese stocks have been building."

"Butter prices have also declined. Butter was $1.93 per pound the start of the month and now is $1.8325. Butter stocks have been building as well."

"USDA’s estimate of June milk production showed the growth in milk production slowing. Milk production was up 1.5% in May but just 0.7% in June, the result of 0.5% more cows and just 0.2% more milk per cow."

"Depending upon the level of milk production it could be until the second half of next year before the Class III price returns to the $16’s and the Class IV price to the $15’s. Class III and Class IV dairy futures currently show this same pattern of prices. With feed prices averaging a little higher this fall and winter margins to dairy producers will be lower which could lower increases in milk production for next year."

"If milk cow numbers continue to decline and milk per cow remains below trend like in June, then the growth in milk production will be dampened and milk prices may improve quicker towards year end and into next year."

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Futures on the Chicago Mercantile Exchange
7-24-2015 July Aug Sept Oct Nov Dec Jan Feb Mar Apr

Class III Milk
($ per cwt.)

16.31 16.28 16.32 16.24 16.17 16.00 15.61 15.43 15.40 15.47

Class IV Milk
($ per cwt.)

13.34 13.14 13.33 13.53 13.58 13.21 13.25 13.61 13.68 13.59

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