Missouri Dairy Business Update

Volume 17, Number 11
November 2017

Milk Prices

According to Bob Cropp's November Dairy Outlook, "USDA’s milk production report for the U.S. showed October milk production picking up a little with October production 1.4% higher than a year ago compared to September 1.0% higher. This is a lot of milk considering that last year milk production was running 2.5% higher than a year ago. The October increase was the result of 0.7% more cows and just 0.6% more milk per cow."

"USDA and other forecasters have lowered their price forecast for 2018. Both Class III and Class IV futures for 2018 have fallen. Class III futures are in the $14’s January through May and in the $15’s for the remainder of the year. Class IV futures start the year below $14 reaching the $14’s by March and the $15’s by August. If these prices hold true, milk prices will average lower than this year. USDA is saying the Class III price in 2018 could average as low as $15.50 and the Class IV price as low as $14.15. But, final milk prices will depend upon the level of milk production, domestic sales and exports. USDA is forecasting an increase in 2018 milk production of 1.8% from 0.5% increase in the average number of milk cows and 1.3% more milk per cow. This is a lot of milk following a 1.6% increase forecasted for this year. But, if milk prices start the year near current futures market prices, we could see heavier culling of milk cows and a lower increase in milk per cow."

"Unless there is good growth in world demand to absorb this increase in milk production world dairy product prices will decline. China and others are expected to increase their imports, but world prices have already started to decline which will put pressure on U.S. prices. But, still I feel milk prices will end up higher than current futures market prices particularly for the last half of the year from a little lower increase in milk production and prices supported by domestic sales and exports."

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CME Class III and Class IV Milk Futures
11-27-2017 Nov Dec Jan Feb Mar Apr May June July Aug

Class III Milk
($ per cwt.)

16.80 15.15 14.43 14.51 14.57 14.71 14.93 15.27 15.55 15.60

Class IV Milk
($ per cwt.)

14.01 13.71 13.73 13.82 14.00 14.19 14.30 14.55 14.87 15.10

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