Milk Prices 'Holding Up' … Thus Far

Income over rising feed costs will prove to be critical.

Published on: Jul 13, 2010
Rising cheese prices on skinny futures volume pushed June's all-milk average up $1 per hundredweight. Butter demand also helped. But as Penn State Ag Economist Jim Dunn reported this week, there's not a lot of upward momentum in the market.

Class III futures are around $13.60 a hundred for July and above $14.50 for the rest of 2010. That puts Pennsylvania's all-milk average for the rest of 2010 at $17.82.

Volatile corn, alfalfa and soybean markets will test income over feed costs in coming months, implies Dunn. Penn State's measure of income over feed costs rose $0.49/cow/day in June or 6.6% from its May levels due entirely to the milk price increase.

June feed costs also rose by 16 cents per cow per day, due to rising alfalfa hay costs in Pennsylvania. With Mid-Atlantic drought conditions widening, hay costs aren't likely to improve the feed cost situ.

Milk prices, predicts Dunn, look like they'll be in the $17.30 to $18 range for the Pennsylvania all-milk price for the next year. "If feed prices don't run amok, this should leave a milk margin that's typical of the five-year average.