Dairy Outlook: Milk Market Foresees More 2014 Milk

Enjoy current milk price. More milk and lower prices are forecasted for early 2014.

Published on: Sep 16, 2013

Despite a 3.5% drop in California milk, U.S. milk production rose this summer. But according to September's Pennsylvania Dairy Outlook, more milk production is on the way.

"Western producers will respond to lower feed costs with production increases," says Jim Dunn, ag economist at Penn State University. So far, though, he adds, strong export numbers and news from New Zealand may have allayed fears and have resulted in minor net changes across the product prices.

August's Pennsylvania all-milk price was $0.10 higher than July at $20.80 per hundredweight. August's Class III price was up $0.54 from July, at $17.91.

Based on September 9 futures prices, Dunn anticipates Class III futures for September to be $18.14, while the rest of 2013 will average $17.55. However, Class III futures for December 2013 and first half of 2014 are below $17.

MOO-JUICE SOURCE: While fewer cows are producing more milk, cow numbers are expected to rise over the next six months.
MOO-JUICE SOURCE: While fewer cows are producing more milk, cow numbers are expected to rise over the next six months.

August's Class IV price was up $0.17 from May at $19.07. September's Class IV futures price is $19.42. For the rest of 2013, Dunn expects Class IV futures prices to average $19.15. He pegs Pennsylvania's all-milk price at:

  • September        $21.87
  • October                        $21.78
  • November         $21.11
  • December         $20.96
  • January             $20.38
  • February           $20.06
  • March               $19.95
  • April                 $19.82
  • May                  $19.88
  • June                 $20.07

Dairy exports continue to be strong due to the U.S. dollar' s value against the Australian and New Zealand dollars and essentially unchanged against the Euro. July exports were 17.6% of U.S. milk production on a total solids basis, a record level. "Without these exports, the industry would have to shrink since milk per cow grows faster than the U.S. population," reminds Dunn.

Dairy Outlook: Milk Market Foresees More 2014 Milk
Dairy Outlook: Milk Market Foresees More 2014 Milk

Disclaimer: USDA's milk production report continues to lack cow numbers and milk per cow due to federal budget sequestration. Dunn says that until the National Agricultural Statistics Service reporting returns to normal in two months, interpreting the report is a guessing game as to real changes in cow numbers and milk per cow.