|Missouri Dairy Business Update|
|Volume 7, Number 2|
According to Bob Cropp's Dairy Outlook, "Despite a continuation of relatively strong milk production and high stocks of dairy products
current and future milk prices remain strong. The December Class III price was $13.47, the
highest price for the year, resulting in an $11.89 average Class III price for the year. The January
2007 Class III price was $13.56 and is projected to be much higher for the remainder of the year.
Other factors that will help to support these higher milk prices in 2007 are: A smaller increase in milk per cow due to a milk-feed price ratio below 3:00, the result of higher corn, hay and soybean prices as well as some feed quality problems and reduced use of rBST. A decline in cow numbers by the second half of 2007 as cow slaughter runs higher than a year earlier and the fourth round of CWT being implemented. An expected continued good growth in commercial disappearance will also add support. But, despite these factors it may be a little optimistic to assume current CME Class III futures prices will hold this high through 2008."
Future MILC estimates may be derived from the following formula:
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/