Milk Prices

According to the Bob Cropp's Dairy Outlook, "The year 2007 will be remembered as record high milk prices. Prices average about $6.00 per hundredweight higher than 2006. Averages for the year were: Class III $18.04, Class IV and Class II both $18.36, the Class I mover $18.75 and the average U.S. All Milk Price $19.15. Lower prices are forecasted for 2008, perhaps averaging about $2.00 lower, but possibly still
ending up the second highest on record. Nevertheless, higher feed prices will shrink profit margins for dairy producers in 2008.

The Class III price, which was $20.60 for December, will be around $19.15 for January. With declining cheese prices, the Class III price will continue a decline ending the first quarter of 2008 below $17.00. The Class III price may stay in the $16.00 to high $16.00s range through the third quarter before falling below $16.00, and even $15.00, by the end of the fourth quarter. If these prices hold, the Class III price for the year would still average near $16.00. But, one needs to watch milk production, domestic sales of milk and dairy products as well as dairy exports. Changes in any of these factors as we go through the year could substantially change the price out come."