Milk Prices

According to the Bob Cropp's Dairy Outlook, "Farm level milk prices have declined but remain relatively high. The February Class III price will be near $17.20, down more than $2 from the $19.32 for January but still more than $3.00 higher than a year ago. The Class IV price for February will be near $15.40, down about $0.90 from the $16.29 for January but still about $2.70 higher than a year ago. We can expect the Class III to fall below $17.00 for March but it could stay above $16.00 through at least October. Currently, Class III futures are all in the high $16.00s. Class IV is also likely to decline further dropping below $15.00 by spring and then recovering once again to well over $15.00 by the second half of the year. As of now, it appears that the advanced Class III price rather than the advanced Class IV price will be the mover of Class I prices most, if not all of 2008."

According to the USDA Dairy Outlook, "Corn is expected to average $3.75 to $4.25 a bushel, and soybean meal is forecast to average $305 to $335 a ton for the 2007/08 marketing year. Alfalfa hay prices will depend on improved weather and producers’ planting responses to high grain prices. Lower milk prices and higher feed costs will likely dampen herd expansion later in 2008. Although production per cow will likely be affected by feed costs and hay availability, output per cow is projected to rise 1.6 percent to 20,605 pounds in 2008. Milk production growth will likely begin to slow in the second half of 2008."