2009 Milk Prices Will Be A Challenge
One of the challenges of 2009 will be milk prices and the big question now is, are we close to the bottom on cheese prices. Blocks slipped another quarter-cent lower in the first day of trading since the Christmas break, to $1.2675 per pound, while barrel was unchanged, holding at $1.3075, 4 cents above the blocks.
The University of Wisconsin’s, Dr. Brian Gould, said in Tuesday’s DairyLine, if you look at the 2009 futures market, it’s almost two different years. The Class III milk price average for the first half of 2009, as of December 24, was $12.22, with a low of $11.56.
There is a recovery in the second half of the year, he said, as the average is $14.46, and “After we get through January and February, the market thinks there’s going to be a steady increase in that Class III, depending what causes that Class III, or whether the Class III affects the cheese price, the chicken and egg question.” Gould says we could see a recovery in the second half of 2009
But, dairy producers appear to be thinking something different. The latest Livestock Slaughter report shows 208,200 culled dairy cows were slaughtered under federal inspection in November, down about 9,200 head from October and 28,000 less than November 2007. For January to November, cull cow slaughter totaled 2.3652 million head, up about 70,300 from the same period in 2007.
Gould warned that farmers are not reducing their herds as much as we would think and that could mean more downward pressure on the milk price. He raised the issue of the impact of the CWT herd removal but did not have an answer.
When asked about the butter market, Gould said the Class IV is about as low as you can go, a little above $10.00 per hundredweight, but he doesn’t see it going much lower. Butter stocks are not abnormal, Gould concluded, although the export market is softening.
Will California become a federal milk market order? Dairy producers and their organizations are debating the pros and cons of doing so in light of the California Department of Food and Agriculture’s decision to reduce Class I milk prices there.
Will California become a federal milk market order? Dairy producers and their organizations are debating the pros and cons of doing so in light of the California Department of Food and Agriculture’s decision to reduce Class I milk prices there.