Missouri Dairy Business Update

Volume 16, Number 3
March 2016

Milk Prices

According to Bob Cropp's March Dairy Outlook, "In March milk prices will not change much from February and remain well below a year ago. Dairy product prices may average just a little lower than February."

"Milk production started off slow with January milk production up just 0.2%, the result of 2,000 more cows and a 0.16% increase in milk per cow. But, February's production, adjusted for leap year, improved to an increase of 1.0% from 4,000 more cows and 0.9% more milk per cow. Changes in milk production continue to show regional differences with lower or small increases in the West and relatively strong increases in the Northeast and Midwest."

"Dairy exports are not likely to push milk prices up until late in the year or into 2017. The level of world stocks and world milk production along with the lower imports by China and Russia have depressed world prices."

"The forecast for the average ALL Milk Price is $14.95 to $15.55 compared to $17.08 last year. Current Class III futures are not any more optimistic with Class III in the $13's until August and then in the $14's for the remainder of the year and the first half of 2017. But, I think milk prices still have a good chance of turning out somewhat better than this. Milk production may not increase as much and exports could improve more than now anticipated during the second half of the year. We could see the Class III in the $14's by May, the $15's by July and the $16's by September or October and average near $15 for the year with the All Milk Price averaging near $16.30. Even if these higher prices materialize, it will be a tough year for dairy."

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CME Class III and Class IV Milk Futures
3-24-2016 Mar Apr May June July Aug Sept Oct Nov Dec

Class III Milk
($ per cwt.)

13.77 13.86 13.78 13.78 13.95 14.32 14.57 14.69 14.73 14.73

Class IV Milk
($ per cwt.)

12.91 13.18 13.13 13.44 13.87 14.01 14.20 14.25 14.48 14.30

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