Missouri Dairy Business Update Commercial Agriculture
Volume 4, Number 6
June 2004

Milk Prices - Dropped Like a Rock

Cheese and butter prices dropped last week, causing milk futures to drop like a rock. On Monday, June 21st, July Class III futures closed at $16.13. By Friday, June 25th, Class III futures were down to $14.53. Based upon current futures prices, MILC payments will restart by October.

April's Missouri Dairy Business Update quote of economist Bob Cropp proved prophetic, "We need to recall recent history that when cheese and milk prices reach relatively high levels-September of 1999 and September of 2001 - once prices fell, they fell quickly and to low levels. Could this happen again? The answer is yes."

According the USDA's latest Dairy Outlook, "Wholesale prices of cheese and butter in mid-June were down almost 20 percent from their April peaks. The April peaks represented an overreaction to the large February-March declines in milk production and the sharp March-April surge in wholesale cheese movement. The flow of milk and milk solids into cheese production, the easing of declines in milk production, and the subsiding fears of buyers triggered a price adjustment that probably will persist (at a rather gradual rate) through most of the rest of 2004."

2004 Milk Futures on the Chicago Mercantile Exchange
6/28/2004
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Jan-05
Feb-05
Mar-05
April-05
May-05
Class III
17.69
14.53
13.10
13.35
12.81
12.30
12.06
12.30
12.18
12.20
12.45
12.50
Class IV
13.90
14.00
14.00
13.55
13.55
12.70
13.00
est. MILC pmt.
0.05
0.12
0.49
Note: Estimated MILC Payment from http://cpdmp.cornell.edu/

Current USDA Milk Price Forecasts
17-Jun-04        
 
1st Q 2004
2nd Q 2004
3rd Q 2004
4th Q 2004
Class III Price
12.66
19.10 to 19.30
16.05 to 16.55
13.45 to 14.25
Class IV Price
12.43
13.95 to 14.25
12.30 to 12.90
11.45 to 12.35
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook http://www.ers.usda.gov/publications/so/view.asp?f=livestock/ldp-mbb/

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

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


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