Missouri Dairy Business Update

Volume 16, Number 4
April 2016

Milk Prices

According to Bob Cropp's April Dairy Outlook, "Growing stocks will keep downward pressure on dairy product prices. Compared to a year ago, February Butter stocks were 31.5% higher and 26.2% higher than the 5-year average for this date. Total cheese stocks were 10.8% higher and 13.5% higher than the 5-year average for this date. Relatively strong exports resulted in nonfat dry milk stocks to be 10.5% lower, but still 12.5% higher than the 5-year average for this date. Dry whey stocks were 20.1% higher. With growing stocks butter makers are not seeking higher levels of cream to make butter. Available storage capacity for cheese plants in the Midwest is also becoming tight."

"USDA's milk production report for March milk was not good news for milk prices. March milk production was 1.8% higher than a year ago from 0.2% more milk cows and 1.6% more milk per cow. This is a lot of milk considering milk production a year ago was also running 1.4% higher than the year before. Milk cow numbers increased monthly for each of the three month this year and were 10,000 head higher than February. Despite low milk prices producers may be keeping cows longer due to rather low slaughter cow prices. Plus, there is a good supply of dairy replacements."

"USDA now forecasts the Class III price for the year to only average between $13.65 to $14.15, the Class IV price to average between $12.90 and $13.50 and the U.S. All Milk price to average between $15.00 and $15.50. If milk production continues to show rather strong increases and exports do not improve more than now projected, these prices are quite likely. But, there is still a good possibility prices could do somewhat better than this for the second half of the year."

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CME Class III and Class IV Milk Futures
4-20-2016 Apr May June July Aug Sept Oct Nov Dec Jan 17

Class III Milk
($ per cwt.)

$13.69 $13.58 $13.88 $14.35 $14.85 $15.16 $15.30 $15.25 $15.24 $15.33

Class IV Milk
($ per cwt.)

$12.76 $13.41 $13.95 $14.35 $14.85 $15.19 $15.17 $15.24 $15.08 $14.39

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