Missouri Dairy Business Update  
Volume 6, Number 7
July 2006

Milk Prices

According to the USDA Dairy Outlook, "The projected average price for Class III milk is $11.40-$11.70 per cwt, up slightly from June’s projection. The Class IV price is expected to average $10.45-$10.85 per cwt, down from June’s estimate. The all milk price for 2006 is expected to average $12.50-$12.80/cwt"

According to Bob Cropp's July Monthly Outlook, "As of now, I look for a Class III price by September reaching $12.25 and an average all milk price of $13.15. Currently Class III futures are not this optimistic. To reach the $12.25 Class III price, we need a rally in cheese prices to about $1.32 per pound"

2006 Milk Futures on the Chicago Mercantile Exchange
07/26/06
Jul
Aug
Sep
Oct
Nov Dec Jan 07 Feb Mar Apr May Jun
Class III
$10.95
$11.10
$12.15
$12.63
$12.60
$12.50
$12.60
$12.38
$12.42
$12.58
$12.63
$12.75
Class IV
$10.40
$10.92
$11.18
$11.29
$11.35
$11.35
-
-
-
-
-
-
Butter Futures
$1.13
$1.24
$1.28
$129
$1.29
$1.29
$1.31
$1.31
$1.33
$1.33
$1.34
$1.36

Future MILC estimates may be derived from the following formula:
($13.69 - (Higher of Class III or IV price) *$0.34)
MILC-X Fact Sheet, Payment Calculations, and USDA Details are available at http://www.fsa.usda.gov/dafp/psd/MILC.htm

Current USDA Milk Price Forecasts
07/18/06
2nd Q 2006
3rd Q 2006
4th Q 2006
1st Q 2007
Class III Price
$11.02
$11.05 to $11.45
$11.35 to $12.05
$11.25 to $12.25
Class IV Price
$10.30
$10.15 to $10.65
$10.20 to $11.00
$10.15 to $11.25
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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