Missouri Dairy Business Update

Volume 16, Number 2
February 2016

Milk Prices

According to Bob Cropp's February Dairy Outlook, "USDA's report of January milk production compared to a year ago showed milk cows just 2,000 head higher, and milk per cow just 0.2% higher resulting in 0.3% more total milk production."

"Compared to January a year ago, milk production continued the same regional pattern as last year with relatively small increases or lower milk production in the West and larger increases in the Northeast and Upper Midwest. California's milk production during 2015 was lower than the previous year for each month. January's milk production shows the same trend with milk production 0.3% lower than a year ago. California's decline in milk production continues to be due primarily to less milk per cow."

"Current Class III futures don't reach $14 until May and stay in the $15's for the remainder of the year. I think there is a good chance milk prices could do better than this. I think the increase in milk per cow could be less than 1.9% resulting in less than a 1.7% increase in total milk production. I also think exports during the second half of the year will improve especially for nonfat dry milk/skim milk powder and whey proteins. But, U.S. will face rather stiff competition for markets from both New Zealand and the EU. As of now I forecast Class III prices in the $15's by third quarter and in the 16's for the fourth quarter and averaging for the year in the low $15's. But, milk prices are very sensitive to rather small changes so prices could turn out quite different than how things now look."

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CME Class III and Class IV Milk Futures
2-26-2016 Feb. Mar Apr May June July Aug Sept Oct Nov

Class III Milk
($ per cwt.)

13.80 13.66 13.50 13.53 13.84 14.21 14.60 14.94 15.20 15.20

Class IV Milk
($ per cwt.)

13.44 13.25 13.28 13.46 13.80 14.15 14.45 14.69 14.83 14.90

Historical Missouri milk prices including comparison to the USDA National All Milk Price used for MPP may be found at:http://dairy.missouri.edu/mkt/index.htm