|Missouri Dairy Business Update|
|Volume 7, Number 4|
Milk Prices - Wow!
Class III and Class IV milk futures prices have exploded in recent days.. The speed of this upward movement suggests commercial users covering inventory needs for the rest of the year as well as speculators jumping on the market for the upward ride.
If the current futures accurately predict the rest of the year, by midsummer the Class I or fluid milk prices in Missouri will be more than $22.00, making for some nice milk checks, especially in Southern Missouri where the Class I utilization often runs over 55% in the summer.
According to the USDA's Dairy Outlook, "The tightening milk supplies are encountering continued demand growth. The
commercial disappearance of all milk and dairy products was up 4.4 percent for the
November through January period compared with a year earlier. Meanwhile, milk
production rose 2.4 percent during the same period. Prices for cheese and butter
have remained strong, and February stock levels for American cheese and butter
were unchanged and 10 percent higher respectively, according to the March Cold
According to Bob Cropp's Dairy Outlook, "Milk production growth continues to slow from the 2% even 5% monthly increases from the
previous year during 2006. This has been a major factor in strengthening milk prices this year.
Compared to year earlier, March milk production for the 23 reporting states was up 1.1 percent.
Milk cows were 0.7% more than a year ago, but a continued low increase in milk per cow of just
0.4% held down the increase in total milk production.
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/