Missouri Dairy Business Update

Volume 18, Number 1
January, 2018

Milk Prices

According to Bob Cropp's January Dairy Outlook, "Milk prices started to decline last December and will continue to fall first quarter of 2018. Class III reached its peak last year in November at $16.88 but fell to $15.44 in December and it looks like January will be down to near $13.90. Class IV reached its peak last year in August at $16.61 fell to $13.51 in December and will be near $13.30 in January."

"The lower milk prices are being driven by relatively high milk production, a decline in beverage milk sales, slower growth in butter and cheese sales and a decline in nonfat dry milk/skim milk powder (NDM/SMP) exports all resulting in relatively high stocks levels. Adjusting for 2016 leap year 2017 milk production was up 1.7%. With milk production this strong favorable milk prices require good domestic sales and increased dairy exports."

"So for 2018 we could see Class III prices in the $13’s first quarter, the $14’s second quarter, low $15’s third quarter and the mid to high $15’s fourth quarter and averaging around $14.90 for the year. Class IV could be in the $13’s through May, the $14’s through September and the low $15’s last quarter and averaging about $14.25 for the year. Current dairy futures for Class III and Class IV show even lower prices. But prices may well end up averaging a little higher. The low milk prices first half of the year could well lower both the number of milk cows and the increase in milk per cow. Dairy exports for the second half of the year could also do better than now expected."

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CME Class III and Class IV Milk Futures
1-30-2018 Jan Feb Mar Apr May Jun July Aug Set Oct

Class III Milk
($ per cwt.)

13.88 13.38 13.41 13.59 14.02 14.50 14.99 15.41 15.61 15.83

Class IV Milk
($ per cwt.)

13.23 13.25 13.36 13.60 13.83 14.03 14.20 14.43 14.63 14.79

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