Wisconsin Ag Connection - Cropp Expect Class III Milk to Remain Below $14 for a While

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Cropp Expect Class III Milk to Remain Below $14 for a While
Wisconsin Ag Connection - 01/28/2016

It appears that lower milk prices are going to remain on the radar for the foreseeable future. University of Wisconsin-Extension expert Bob Cropp reiterated in his latest Dairy Situation and Outlook report that while the increase in milk production slowed during the final quarter of 2015, there is still a lot of product on the market.

"Domestic sales of butter and cheese sales were strong last year while fluid sales continued to decline," Cropp said. "But, with butter and cheese prices much higher than world prices exports fell well below year ago levels and at the same time imports were much higher. So stocks of butter and cheese ended the year at higher levels."

As a result, he predicts the January Class III price to be near $13.75 compared to $14.44 last December and $16.18 a year ago. Cropp says the last time the Class III price was this low was January of 2011.

"The Class III price is likely to remain below $14 the entire first quarter," he noted.

Meanwhile, U.S. dairy exports will keep a damper on milk prices at least for the first half of the year. Cropp says there remains a buildup of world dairy stocks that need to be worked off before world prices increase and before we can expect improvement in U.S. dairy exports.

The U.S. also can expect to see strong competition for markets from the EU and New Zealand. How soon world stocks are reduced will depend upon what happens to milk production in those two countries, according to Cropp.

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