Missouri Dairy Business Update
Volume 3, Number 2
February 2003

More milk! Until traders start to see less milk, prices probably won't improve. For milk production to drop, someone has to cull more cows. So far, that hasn't happened.

Historical Missouri milk prices may be found at: http://agebb.missouri.edu/modbu/milkprices.htm To understand how Class III and Class IV prices relate to your local announced prices, check out the dairy basis website at: http://agebbfp.missouri.edu/commag/beefanddairy/basis.htm

Since last month, the USDA has lowered their Class III price forecast about $.30 per cwt for the second and third quarters of 2003. However, the MERC futures have dropped significantly this month. After watching milk production continue to climb in January the futures market seems to have thrown in the towel and become as pessimistic on milk prices as the USDA.

Current USDA Milk Price Forecasts
18-Feb-03

	1st Q 2003	2nd Q 2003	3rd Q 2003	4th Q 2003
Class III Price	9.60 to 9.90	9.50 to 10.10	9.70 to 10.60	10.40 to 11.40
Class IV Price	9.75 to 10.15	9.65 to 10.35	9.95 to 10.95	10.20 to 11.30

Source: USDA, ERS, Livestock, Dairy & Poultry Outlook
http://www.ers.usda.gov/publications/so/view.asp?f=livestock/ldp-mbb/

2003 Milk Futures on the Chicago Mercantile Exchange
27-Feb-03

	Feb-03	March	April	May	June	July	Aug	Sept	Oct	Nov	Dec	Jan-04
Class III	$ 9.66	$ 9.11	$ 9.43	$ 9.85	$10.30	$10.64	$11.05	$ 11.48	$11.45	$11.38	$11.23	$ 11.28
Class IV	$10.00	$10.15	$ 10.20	$10.33	$10.40	$10.45	$10.45	$ 10.50
est. MILC pmt.	$ 1.55	$ 1.75	$ 1.58	$ 1.53	$ 1.50	$ 1.47	$ 1.34	$1.19

Note: Estimated MILC Payment from http://cpdmp.cornell.edu/