Milk Prices

According to the Bob Cropp's Dairy Outlook, "Due to lower cheese, dry whey and butter prices the end of March and early April the mover for May Class I milk was announced almost $2.00 lower than April, $18.61 for April and $16.62 for May. While dairy product prices will average higher for the last half of April, lower prices earlier will result in an April Class III price of around $17.00, down about $1.00 from $18.00 in March.

Class III futures are very bullish. Class III prices are back to about $17.80 for May, with June at $18.55 and then above $19.00 through March of 2009 and even above $18.00 through March 2010. These prices are surely possible, but they will require milk production to not increase much more than 2%, domestic sales remain strong and expected increased exports of cheese, butter, dry whey and nonfat dry milk come to pass. Prices are very sensitive to rather small changes in or anticipated changes in any of these factors and can result in quite different milk prices. Price risk remains very real in the dairy industry."