Missouri Dairy Business Update

Volume 17, Number 9
September 2017

Milk Prices

According to Bob Cropp's September Dairy Outlook, "Forecasted milk prices for the remainder of the year have softened from what was expected earlier. The Class III price was $16.44 in June, fell to $15.45 in July, but increased to $16.57 in August and was expected to continue to strengthen reaching into the low $17’s by October. But, now the September Class III price will weaken some to around $16.25. And it will take a rally in cheese prices to strengthen the Class III price October through December."

"Dairy exports have added strength to milk prices. But, after 12 straight months of year-over-year growth, dairy export volume declined in July. Exports of nonfat dry milk/skim milk powder declined 13%, the first decline since June 2016. Nonfat dry milk/skim milk powder exports are facing competition from the EU. Both whey products and lactose exports were unchanged from a year ago. However, exports of butterfat and cheese were 66% and 14% higher respectively. On a total solids basis exports were equivalent to 13.4% of U.S. milk production compared to 14.5% last year and the lowest since January."

"Looking into 2018 the Class III price could be in the $15’s first quarter before moving into the $16’s. Current Class III futures don’t reach the $16’s until July. With expected improvement in milk production in the EU and New Zealand U.S could face stiff competition for nonfat dry milk/skim milk powder exports. The result could be a Class IV price in the $15 the first half of the year with stronger butter prices pushing it into the low $16’s for the second half. Current Class IV futures also reflect this price pattern."

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CME Class III and Class IV Milk Futures
9-26-2017 Sept Oct Nov Dec Jan Feb Mar Apr May June

Class III Milk
($ per cwt.)

16.37 16.28 16.54 16.41 16.08 16.02 15.95 15.73 15.83 15.97

Class IV Milk
($ per cwt.)

15.95 15.47 15.51 15.63 15.43 15.53 15.74 15.77 15.79 15.82

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