Missouri Dairy Business Update Commercial Agriculture
Volume 3, Number 8
August 2003

Milk Prices

Milk futures prices were moving up nicely until the USDA's monthly milk production report came out on August 15th. The report showed an increase in July milk production and revised the June milk production report to also show an increase in milk production in June also. The markets dropped hard for a couple of days. Since then the underlying strength in the cheese market has lifted prices back a bit.

According to the latest USDA Dairy Outlook, "Buyers have become much more aggressive in seeking current cheese and second-half supply commitments. However, it is not yet clear whether these actions imply more than just a typical precautionary response to rising prices. The size and duration of price increases, supported by recent production data and signs of demand recovery, suggest some market tightness in coming months. But, the expected ample supplies of butter and nonfat dry milk may re-emerge as major factors in cheese prices, once cheese pipelines are rebuilt."

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

2003 & 2004 Milk Futures on the Chicago Mercantile Exchange
8/28/2003 Aug Sept Oct Nov Dec Jan-04 Feb Mar Apr May June July
Class III Price $13.77 $14.07 $13.83 $12.60 $12.00 $11.85 $11.25 $11.34 $11.38 $11.39 $11.77 $12.00
Class IV Price $10.35 $10.40 $10.36                  
est. MILC pmt. $ 1.22 $ - $ -                  
Note: Estimated MILC Payment from

Current USDA Milk Price Forecasts
18-Aug-03 3rd Q 2003 4th Q 2003 1st Q 2004 2nd Q 2004
Class III Price 12.85 to 13.15 11.35 to 11.95 9.60 to 10.50 9.80 to 10.80
Class IV Price 10.00 to 10.40 10.15 to 10.85 9.60 to 10.60 9.40 to 10.50
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

MILC payments for August milk will be $1.22/cwt., and $0.00 for September. Based upon current futures, (8/28/2003), the MILC payment will be $0.00 in October. 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_Prices/MILC%20calculator/DMLP.htm

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