Missouri Dairy Business Update  
Volume 8, Number 7
July 2008

Milk Prices

According to Bob Cropp's Dairy Outlook, "The June Class III price was $20.25 and the Class IV price $15.92. With cheese prices weaker, the July Class III price will be around $18.20. Higher butter and nonfat dry milk prices will increase the July Class IV price to around $16.95. Cheese prices could show some weakness in August, especially if milk production continues to increase 3% or more, but recover some September through early December. Nonfat dry milk prices and butter prices could improve some as well. Class III prices August to year’s end could range $18.00 to $19.50 and Class IV prices increase to and stay above $17.00."

According to the USDA Dairy Outlook, "Higher feed costs should ultimately slow increases in milk production next year. However, this year, the dairy herd continues to expand and output per cow continues to rise, albeit at a slower pace. Herd expansion should slow in the third and fourth quarters compared with the first half of 2008. A slight contraction should become apparent in 2009. Milk production will continue to expand both this year and next as output per cow continues a gradual rise. Demand in the major product sectors remains strong, especially export demand. Prices both this year and next will remain near 2007 levels."

Milk Futures on the Chicago Mercantile Exchange
July Aug Sept Oct Nov Dec Jan 09 Feb Mar Apr
Class III $18.19 $17.97 $18.14 $18.20 $18.15 $18.13 $17.94 $17.98 $17.98 $18.35
Class IV $16.95 $17.10 $16.55 $17.27 $16.55 $16.75 $17.05 $17.10 $17.10 $17.10
Butter Futures $1.52 $1.54 $1.56 $1.57 $1.57 $1.57 $1.58 $1.59 $1.61 $1.64

Current USDA Milk Price Forecasts
2nd Q 2008 3rd Q 2008 4th Q 2008 1st Q 2009
Class III Price $18.40 $18.05 to $18.45 $17.95 to $18.65 $17.36 to $18.36
Class IV Price $15.25 $16.02 to $16.52 $16.65 to $17.45 $16.42 to $17.52
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/

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