Missouri Dairy Business Update Commercial Agriculture
Volume 3, Number 6
June 2003

Milk Prices

YES!!! Future prices are predicting Class III prices will rise $2.50/cwt in the next 60 days, and $3.25/cwt by September!

A 0.4% drop in milk produced in May versus milk production in May a year ago has finally nudged up milk prices. June Class III milk will probably end around $9.75/cwt, about the same as May prices. However, the futures market is predicting a sharp rise into the summer and fall. Futures are listed in the table below.

In contrast, the USDA still is predicting the Class III prices will not rise above $10.30 in the third quarter and $11.00 in the 4th quarter of 2003. Depending upon whom you believe, now is either the time to celebrate or to hedge your milk price on the futures exchange!

MILC payments for July milk will be $1.76/cwt.

According to the latest USDA Dairy Outlook, "Exit of dairy farms reportedly has begun to pick up but clearly has yet to become common. Although recent low returns have produced considerable income stress on many operations, the high returns of earlier years probably were used for early maintenance and capital replacement and may have left a cash reserve. In addition, payments under the Milk Income Loss Contracts (MILC) undoubtedly played a significant role, particularly for smaller farms."

Historical Missouri milk prices may be found at: http://agebb.missouri.edu/modbu/milkprices.htm

2003 Milk Futures on the Chicago Mercantile Exchange
6/25/2003 June July Aug Sept Oct Nov Dec Jan-04 Feb Mar Apr May
Class III Price $ 9.73 $10.89 $12.25 $13.00 $12.95 $12.50 $12.14 $12.00 $11.70 $11.60 $11.40 $11.55
Class IV Price $10.10 $10.17 $10.15 $10.15 $10.15              
est. MILC pmt. $ 1.76 $ 1.59 $ 1.29 $ 0.76 $ 0.44              
Note: Estimated MILC Payment from

Current USDA Milk Price Forecasts
17-Jun-03 2nd Q 2003 3rd Q 2003 4th Q 2003
Class III Price 9.55-9.75 9.80-10.30 10.20-11.00
Class IV Price 9.60-9.90 9.75-10.35 9.90-10.80
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

To view the calculations behind the MILC payments and to check the very latest MILC payments check the NE Milk Marketing Administrators website at: http://www.fmmone.com/Northeast_Order/MILC%20calculator/DMLP.htm

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