Missouri Dairy Business Update

Volume 17, Number 7
July 2017

Milk Prices

According to Bob Cropp's August Dairy Outlook, "After taking a dip down in July milk prices will increase again in August. The July Class III price fell $0.99 from June to July to $15.45, but may increase about a dollar in August to near $16.45. The Class IV price did increase $0.52 from June to July to $16.60, but may be unchanged for August. Slower growth in milk production, good domestic sales of butter and cheese and higher dairy exports strengthen dairy product prices which pushed milk prices higher in August."

USDA estimated July milk production o be 1.8% higher than a year ago. This marks the third straight month the increase has been less than 2% which is supportive of higher milk prices.

U.S. dairy exports in the first half of the year were the most in three years due to record exports of nonfat dry milk/skim milk powder and whey products and a 24 percent year-to-date increase in cheese exports. June exports compared to a year ago were as follows: nonfat dry milk/skim milk powder +7%, cheese +32% and butterfat +254%, but total whey exports were 10% lower. On a total solids basis June exports were equivalent to 14.4% of milk production and 14.3% for the year-to-date compared to 13.1% a year ago. Improved exports have been aided by increase in world demand and much improved world prices that are now higher than U.S. prices.

Looking further down the road we could see the Class III price falling back to the mid $16’s first quarter of next year. But, there remains a lot of uncertainty as to final prices. Prices will depend upon the actual level of milk production, domestic sales and exporters. "

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CME Class III and Class IV Milk Futures
8-29-2017 Aug Sept Oct Nov Dec Jan Feb Mar Apr May

Class III Milk
($ per cwt.)

16.53 16.35 16.45 16.35 16.22 16.15 16.20 16.27 16.27 16.39

Class IV Milk
($ per cwt.)

16.63 16.10 16.24 16.26 16.20 15.75 15.84 15.96 16.00 16.04

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