Missouri Dairy Business Update  
Volume 6, Number 1
January 2006

Milk Prices

According to the Bob Cropp's January Outlook, "January product prices will yield a January Class III price only a few cents lower than the December Class III price of $13.37. But, the Class III price for February through March will fall below $13.00 and in the range of $12.60 to $12.85. Class III prices could move above $13.00 by July, but are not likely to peak any higher than $13.75 by September for the year. But, these forecasted milk prices can easily change with un-anticipated changes or perceived changes in milk production and/or commercial disappearance. But, unless milk production increases slow faster than what is now anticipated, substantially higher prices have a low probability of occurring. So dairy producers need to evaluate whether or not they want to protect any of 2006 milk prices with what the futures market is offering and/or cash forward contracts offered by milk buyers."

2006 Milk Futures on the Chicago Mercantile Exchange
01/31/05
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov Dec
Class III
$13.42
$12.41
$12.16
$12.24
$12.32
$12.43
$12.70
$12.85
$13.06
$12.83
$12.75
$12.61
Class IV
$12.50
$12.35
$12.22
$12.22
$12.22
$12.30
-
-
-
-
-
-
Butter Futures
$1.343
$1.275
$1.310
$1.320
$1.325
$1.347
$1.355
$1.380
$1.383
$1.393
$1.410
$1.383

Current USDA Milk Price Forecasts
01/19/06
1st Q 2006
2nd Q 2006
3rd Q 2006
4th Q 2006
Class III Price
$12.70 to $13.10
$11.90 to $12.60
$11.80 to $12.80
$12.00 to $13.00
Class IV Price
$12.15 to $12.65
$11.60 to $12.40
$11.05 to $12.15
$11.05 to $12.15
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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