Missouri Dairy Business Update

Volume 15, Number 9
September 2015

Milk Prices

According to Bob Cropp's September Dairy Outlook, "The outlook for milk prices for the reminder of the year and into 2016 is not for higher prices. Once stocks of butter and cheese are built to levels for the holidays by October or early November butter and cheese prices will likely weaken. Milk production is declining seasonally but is above a year ago and at levels to build stocks."

"Dairy exports are not expected to improve prior to the second half of 2016. With the two largest importers of dairy products, China and Russia importing much less dairy products than early in 2014 along with the level of world milk production world dairy stocks have built to surplus levels. World dairy product prices have fallen to levels not experienced since a decade ago and well below U.S. prices."

"California’s production continues to run well below year ago with August production down 3.4%. Cow numbers were down only 0.1%, but milk per cow was 3.4% lower. Of the 23 reporting states New Mexico had the biggest decline in production at 4.3%, all due to less milk per cow. Texas’s production was also down 1.4% due to 1.7% fewer cows and just 0.3% more milk per cow.

"USDA forecasts total milk production for this year to end up 1.4% higher than last year and expects another 2.0% increase for 2016. But, this will be a little high if the increase in milk production continues at less than 1.0%. But, yet even with milk production at these levels and for exports not to show much improvement prior to the second half of 2016 we can expect the Class III price to decline to the high
$15’s for the remainder of the year and may be the low $15’s first quarter of next year before prices slowly increase reaching the $16’s by third quarter."

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Futures on the Chicago Mercantile Exchange
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Class III Milk
($ per cwt.)

15.38 15.57 15.54 15.51 15.61 15.79 15.85 15.97 16.23 16.40

Class IV Milk
($ per cwt.)

16.80 16.51 15.13 14.95 15.57 15.76 15.78 16.02 16.20 16.29

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