Milk Prices

According to the April 14th USDA Dairy Outlook, "On an annual basis, milk production is forecast to be slightly less than 3 percent over that of 2005. Dairy product use is expected to absorb most of the production increase, but commercial stocks likely will be above last year. The all milk price will average $12.75 to 13.35 per cwt, about $2 per cwt below 2005."

According to Bob Cropp's April Dairy Outlook, "Lower dairy product prices mean lower farm milk prices. The Class III price which averaged $14.05 last year was $13.39 in January, $12.20 in February, $11.11 in March and will be around $10.90 for April. Unless cheese, butter or dry whey prices increase, the May Class III price will be even lower. Any significant increases in product prices are not likely before June or July. Milk production will need to show signs of slowing and commercial sales need to remain favorable. Cow numbers are a key to milk production and numbers are not likely to show any decline before the last quarter of the year, if then. Cow slaughter continues to run below year ago levels. From January through March, cow slaughter has been about 8% lower than for the same period a year ago. The milk feed price ratio fell to 2.77 for March compared to 3.35 a year ago. But, this by itself is not likely to dampen milk production per cow much. Milk per cow most likely will slow from the almost 4% increase as we move into summer and summer temperatures can have a major impact on milk per cow. But, as of now it looks like milk production for the year could easily grow in the 3 to 4% range. This means that the Class III price may not return to $11.00 plus until July and could peak well below $13.00 in September. With milk production much stronger than what was predicted earlier going into the year, the forecast for milk prices is also much lower."