|Missouri Dairy Business Update|
|Volume 4, Number 12|
According the USDA's latest Dairy Outlook:
Fall From 2004 Record Milk Price Seen as Limited
Late 2004 recovery will leave average farm milk prices near $16 per cwt, up about $3.50 from 2003 and easily a record. Milk prices have averaged above a year earlier since the summer of 2003. The year-to-year rise in farm prices was the largest proportional rise since World War I.
In 2004, the value of milk for cheese exceeded the value of milk for butter-nonfat dry milk by a wide margin. This stood in sharp contrast to most of the 2000-02 period when butter-powder values were dominant. The advantage to cheese is expected to narrow in 2005 as extra milk is expected to lower butter and cheese prices but have little impact on powder prices.
Milk prices are projected to fall to $13.85-$14.65 in 2005, still considerably above those of 2002 and 2003. Much will hang on the size and steadiness of the expansion in milk production, where uncertainty is boosted by the BST situation as well as other milk-per-cow factors. Demand growth is expected to be only modestly favorable but could pick up if the economy finds steadier footing. Lastly, behavior by buyers, stung by this year’s price volatility, may be somewhat erratic.
According to the Dairy
Outlook published by Bob Cropp at the University of Wisconsin,
As of now, it looks like 2005, while not as good as 2004, will still shape up to being a well above average year for milk prices."
Historical Missouri milk prices may be found at: http://agebb.missouri.edu/dairy/mkt/index.htm
Hedging Opportunity Chart for next 12 Months http://www.uwex.edu/ces/milkmarketing/