Missouri Dairy Business Update  
Volume 7, Number 9
September 2007

Milk Prices

According to the USDA's Dairy Outlook, "High prices for both dairy cows and replacements indicate strong demand for animals and herd expansion. While not all areas of the country reported production increases, producers are responding to high market prices for milk. Higher feed prices have not been a deterrent to herd expansion. However, high feed prices and tight alfalfa supplies could limit production growth per cow in 2008.

Demand for dairy products will keep milk prices high both this year and next. The Class IV price is projected to average $18.50 to $18.80 per cwt in 2007 and decline slightly to $17.65 to $18.75 in 2008. Likewise, the Class III price is expected to average $18.10 to $18.30 per cwt this year and soften to $16.35 to $17.35 per cwt next year. The all milk price will average $19.20 to $19.40 per cwt in 2007. A
decline to between $18.30 and $19.30 per cwt is expected in 2008."

Milk Futures on the Chicago Mercantile Exchange
9-21-07
Sep
Oct Nov Dec Jan 08 Feb Mar Apr May June
Class III $20.17 $18.26 $17.41 $17.15 $16.47 $15.93 $15.97 $15.76 $15.73 $15.79
Class IV $21.45 $20.60 $19.60 $18.70 $17.55 $17.50 $17.50 $17.20 $17.25 $17.20
Butter Futures $1.39 $1.39 $1.39 $1.40 $1.44 $1.45 $1.46 $1.51 $1.53 $1.54

Current USDA Milk Price Forecasts
9-20-07
3rd Q 2007
4th Q 2007 1st Q 2008 All 2008
Class III Price $20.52 to $20.72 $19.70 to $20.20 $17.78 to $18.68 $16.35 to $17.35
Class IV Price $21.61 to $21.91 $21.19 to $21.79 $19.56 to $20.56 $17.65 to $18.75
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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