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Dairy Situation & Outlook Report Paints Rosier Picture
Wisconsin Ag Connection - 07/28/2016

One of Wisconsin's leading dairy market experts says the industry may have turned the corner toward better milk prices. Professor Emeritus Bob Cropp from the University of Wisconsin-Extension says higher payouts are unexpectedly being driven by higher dairy product prices this summer.

"The good news is milk prices bottomed out in May and are now improving," Cropp said. "The May Class III was $12.76 with June increasing to $13.22 and July will be near $15.35. Class III futures are in the $16s for the remainder of the year. But, it is uncertain if prices will hold at these levels."

Cropp cited recent government numbers, which shows May 31st butter stocks over 22 percent higher than a year ago and 32 percent grater than the five year average. He also noted that sales of butter and cheese have been strong this year.

"Whether dairy product prices increase more in the months ahead will depend on continued strong sales and lower milk production than now forecasted," he said. "It doesn't now look like we can expect much improvement in exports to increase prices. USDA is still forecasting milk production this year to end up 1.8 percent than last year. I think the increase could end up closer to 1.6 percent [as] much of the dairy country is currently experiencing some extreme temperatures which could reduce milk per cow."

For the remainder of 2016, Cropp says he believes Class III and Class IV prices will be at least in the $15 range. USDA is still forecasting prices lower, with Class III in the $13.90 to $14.20 range and Class IV between $13.80 and $14.20.

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