Missouri Dairy Business Update

Volume 17, Number 2
February 2017

Milk Prices

According to Bob Cropp's February Dairy Outlook, "Milk prices ended 2016 at a high for the year. December Class III was $17.40 compared to a low of $12.76 back in May. December Class IV was the high for the year at $14.97. But, milk production continues to increase at a relatively high level and the peak demand for cheese and butter during the holidays is over so some weakening of milk prices is expected for the start of this year. On a positive note dairy exports improved last quarter of the year. Compared to a year ago, December exports were up 3% for nonfat dry milk/skim milk power, 16% for cheese, 27% for butterfat, 43% for whey products and 3% for lactose. Nonfat dry milk/skim milk powder prices were competitive on the world market all of 2016. As a result, nonfat dry milk/skim milk powder exports for the year were 8% higher than the 2015 and actually 10.6% higher than the previous record set in 2014. Nevertheless, stocks of both butter and cheese grew during December. Compared to a year ago, December 31st stocks were 12.8% high for butter and 5.3% higher for cheese."

"As of now it looks like the Class III price to be in the low $16's through about May, then increasing to the $17's with high $17's and even low $18's by October or November with an average for the year around $17.15 compared to $14.87 last year. The Class IV price may stay in the $15's first half of the year reaching the $16's and even the $17's for the last half of the year and averaging about $16.30 for the year compared to $13.77 last year. How dairy exports actually perform over the next couple of months and the level milk production will provide better insight for milk prices during the year."

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CME Class III and Class IV Milk Futures
2-27-2017 Mar Apr May June July Aug Sept Oct Nov Dec

Class III Milk
($ per cwt.)

16.10 16.01 16.05 16.35 16.66 16.85 16.85 16.81 16.81 16.64

Class IV Milk
($ per cwt.)

15.00 14.60 14.75 15.01 15.35 15.58 15.72 16.00 16.00 16.03

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