Missouri Dairy Business Update  
Volume 5, Number 10
October 2005

Milk Prices

According to the October Dairy Outlook published by Dr. Bob Cropp at the University of Wisconsin, "The nation’s milk supply continues to grow at a relatively strong pace. USDA’s latest milk production report shows September milk production for the 23 reporting states up 4.9% from a year ago. This marks the 5th consecutive increase of 4% plus.

For now Class III prices for 2006 could be in the high $12.00s for the first quarter, in the
mid-12.00s for the second quarter, than increase in the 3rd quarter approaching $14.00 in
September before falling seasonally during the fourth quarter to $12.50 by December. But, dairy producers need to keep a close watch on changing market factors and to implement their price risk management strategies as any new developments take place."

 
2005 Milk Futures on the Chicago Mercantile Exchange
10/27/05
Oct
Nov
Dec
Jan-06
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Class III
$14.39
$13.67
$13.46
$13.07
$12.70
$12.75
$12.60
$12.60
$12.73
$13.21
$13.42
$13.70
Class IV
$13.15
$12.90
$12.80
-
-
-
-
-
-
-
-
-
Butter Futures - cash settle
$1.645
$1.535
$1.50
$1.51
$1.50
$1.49
$1.495
$1.49
$1.495
$1.495
$1.525
$1.525

Current USDA Milk Price Forecasts
10/16/05
4th Q 2005
1st Q 2006
2nd Q 2006
3rd Q 2006
Class III Price
$13.65 to $14.05
$12.65 to $13.35
$11.75 to $12.75
$11.75 to $12.75
Class IV Price
$13.10 to $13.60
$12.00 to $12.80
$11.15 to $12.25
$11.15 to $12.25
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/


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