Missouri Dairy Business Update  
Volume 8, Number 12
December 2008

Milk Prices

According to Bob Cropp's Dairy Outlook, "As of December 17th, Class III futures were settling below $13.00 January through April, below $14.00 May through July and only peaking around $14.50 for November and December. The average for the 12 months in 2009 was just $13.54. This compares to an average Class III of $18.04 for 2007 and an estimated 2008 average of $17.45. Class IV prices are even more depressed. Class IV futures are settling below $11.00 January through March, below $13.00 April through July and peaking at around $14.00 for November and December. The average for the year is $11.45 compared to $18.36 for 2007 and an estimated $14.75 for 2008.

Looking ahead into 2009 total milk production may increase no more than 1%. Normally this would mean relatively favorable milk prices. But, a depressed domestic economy and lower dairy exports spells much lower milk prices in 2009. Farm milk prices will likely improve for the second half of the year, but stay well below 2007 and 2008 prices. Hopefully the market has over reacted in the down direction and final prices will not end up as what is currently shown by Class III and Class IV futures."

Milk Futures on the Chicago Mercantile Exchange
12-29-08
Dec Jan 09 Feb Mar Apr May Jun July Aug Sept
Class III $15.14 $11.55 $11.55 $11.99 $12.52 $12.77 $13.23 $13.76 $14.45 $14.83
Class IV $11.50 $10.60 $10.90 $10.90 $11.75 $12.00 $12.50 $12.50 $13.25 $13.50
Butter Futures $1.25 $1.15 $1.18 $1.18 $1.18 $1.22 $1.21 $1.23 $1.27 $1.31

Current USDA Milk Price Forecasts
12-18-08
4th Q 2008 1st Q 2009 2nd Q 2009 3rd Q 2009
Class III Price $15.86 to $16.06 $14.19 to $14.69 $14.42 to $15.22 $14.72 to $15.72
Class IV Price $11.95 to $12.25 $10.02 to $10.62 $10.09 to $10.99 $11.17 to $12.27
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/




Back to the Missouri Dairy Business Update Index