Missouri Dairy Business Update Commercial Agriculture
Volume 4, Number 1
January 2004

Milk Prices

Hedging Opportunity Chart for next 12 Months www.uwex.edu/ces/milkmarketing/

According to the latest USDA Dairy Outlook, "Recent economic improvements apparently are helping dairy product demand. Restaurant sales strengthened as 2003 drew to a close, increasing use of butter and cheese, although restaurant demand remained considerably less favorable than before the late 2001-2002 collapse."

"The basic supply-demand balance appears to have tightened in recent months, largely because of better demand than anticipated. Even so, recent Milk used in manufactured dairy products was below a year earlier during most of 2003 and declines continued through at least November."

"Significant increases from a year earlier in milk for manufacturing are not expected during the first half of 2004."

Posilac rationing and CWT continuation point to better milk prices

Monsanto tightens ration on Posilac to 50% of normal. Monsanto has told current Posilac customers that they will be able to buy only 50% of their past monthly shipments from March 1st through the end of 2004. That is a further restriction from the 85% rationing they announced in December.

Cooperatives Working Together (CWT) Renewal - "CWT's Economic Policy Committee voted at a meeting last week in Chicago to recommend that the full CWT Committee, and the National Milk Producers Board of Directors, approve a renewal of CWT's herd retirement and export assistance programs, to be funded by another assessment of 5 cents per hundredweight, subject to participation by 65 percent of the milk volume nationally, for the period July 1, 2004, through June 30, 2005. Both the CWT committee and the NMPF Board will act on this proposal at their March 8th and 9th meetings in Washington."
Source: NMPF January 20th Press Release

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

2003-04 Milk Futures on the Chicago Mercantile Exchange
1/26/2004 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Class III Price $11.62 $11.69 $11.77 $12.05 $12.22 $12.68 $13.39 $13.72 $14.00 $13.20 $12.46 $12.10
Class IV Price $11.00 $11.15 $11.25 $11.30 $11.50 $11.70 $11.70 $11.90 $12.00 $12.00 $11.90 $11.69
est. MILC pmt. $ 0.83 $ 0.95                    
Note: Estimated MILC Payment from

Current USDA Milk Price Forecasts
1/27/04 1st Q 2004 2nd Q 2004 3rd Q 2004 4th Q 2004
Class III Price 10.75 to 11.15 10.15 to 10.85 10.60 to 11.60 11.25 to 12.25
Class IV Price 10.10 to 10.60 9.75 to 10.55 10.00 to 11.10 10.30 to 11.40
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

MILC payments for January milk will be $0.83/cwt. and for February the payment will be $0.95/cwt. To view the calculations behind the MILC payments and to check the very latest MILC payments check the NE Milk Marketing Administrators website at: www.fmmone.com/Northeast_Order_Prices/MILC%20calculator/DMLP.htm

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