Missouri Dairy Business Update  
Volume 8, Number 12
December 2008

Estimated MILC Payments for 1st Q 2009

Just like in past periods of low milk prices, dairymen will receive MILC payments next year anytime the higher of Class III or Class IV prices drop below $13.69 per cwt.

MILC payments will be made on milk production up to 2,985,000 pounds, which is about 185 cows worth of milk based upon Missouri's average milk production per cow..

The new wrinkle this year is that MILC payments will kick in at prices above a $13.69 level if the feed prices are high. USDA will use monthly published prices in the USDA Ag Prices report for corn, soybeans, and alfafla hay to adjust the trigger point for MILC payments upward beyond $13.69/cwt.

A spreadsheet calculator that demonstrates exactly how this new trigger calculation works is available at: http://future.aae.wisc.edu/milc.html

Based upon commodity prices as of Christmas 2008 our estimate of the MILC payments for the February, March and April months of 2009, indicate the MILC payments will be close to this:

ACTUAL
ESTIMATED as of Christmas 2009
Nov-08
Feb-09 March-09 April 09
Corn $/bu
 $             3.94
 $         3.94
 $       4.00
 $       4.07
Soybean $/bu
 $             9.20
 $         9.50
 $       9.50
 $       9.50
Alfalfa Hay $/T
 $         163.00
 $    163.00
 $  164.00
 $  165.00
Class III Price from Futures prior month
 $           15.51
 $       11.56
 $    11.56
 $    11.93
Adusted MILC Trigger Price
 $           14.53
 $       14.57
 $    14.65
 $    14.73
Difference
 $             0.98
 $       (3.01)
 $    (3.09)
 $    (2.80)
If negative, 45% of difference = MILC Payment
 $                  -  
 $       (1.35)
 $    (1.39)
 $    (1.26)

 


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