According the USDA's Dairy Outlook for NDFM exports, "Commercial exports are expected to stay large in the first half of 2005. European supplies are tight, milk production continues down in Oceania, and U.S. prices are now quite attractive. With U.S. government stocks currently far below the massive levels of recent years, international buyers can no longer be as cavalier about arranging supplies. Unless Oceania production rebounds quite robustly during the end of their season, most of the available U.S. powder through midyear probably will be exported.

Commercial exports are expected to persist into the second half of 2005. Some easing of international markets is possible, and exports are not expected to be as large as during the first half. However, surplus purchases are not projected to be large during the second half."

According to the Dairy Outlook published by Bob Cropp at the University of Wisconsin,

"A key factor to watch is this continued rather poor milk production per cow. Milk per cow has increased much less than the normal annual increase of around 2% for two consecutive
years. December milk per cow was up just 0.4%. This continuation of well below trend milk production per cow is hard to explain. Grain and concentrate prices are reasonable.
The December milk-feed-price ratio was 3.73 compared to 2.85 a year ago. Monsanto has increased the allocation of BST and FDA has released the feeding of Rumensin for dairy cows.

In summary, the outlook for milk prices looks very bright for 2005, with prices well
above average for the first half of the year, but still above average for most of the second half."

Current USDA Milk Price Forecasts
1/21/05	1st Q 2005	2nd Q 2005	3rd Q 2005	4th Q 2005
Class III Price	12.85 to 13.85	12.15 to 13.15	12.25 to 13.25	12.65 to 13.65
Class IV Price	12.20 to 12.70	11.70 to 12.50	11.70 to 12.80	12.00 to 13.10
Source: USDA, ERS, Livestock, Dairy & Poultry Outlook

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/