Cropp: No Big Swings in Milk Prices Foreseen in 2013

By CnAgri Print

Barring a major disruption in dairy policy from the so-called fiscal cliff, milk prices will likely be weaker during the first few months of 2013 and could see recoveries going into next summer and fall. Dr. Bob Cropp with the University of Wisconsin Cooperative Extension noted in his monthly Dairy Situation and Outlook report that the January Class III price could be near $18.00 with little change for the Class IV price; and that the potential for higher prices later in the year will depend upon the level of milk production.

"November milk production was somewhat surprising," he said in the December report. "U.S. milk production was unchanged from a year ago in August, 0.6-percent lower in September and just 0.1-percent lower in October. But, November's production was 1.0-percent higher, the net result of 0.2-percent fewer milk cows but milk per cow 1.2-percent higher."

But with milk prices weakening some for December and January and feed prices still high, U.S. milk production is not likely to show relatively strong increases, he said.

"Although a small increase in cow numbers did occur for November, cow numbers are still likely to average lower for 2013 versus this year," Cropp stated. "And with still high feed prices margins for dairy producers may still not be at levels that would suggest any strong increase in milk production. With world milk prices increasing some U.S. dairy exports ought to remain favorable. It now looks like milk prices will average higher for 2013 than this year. But, there exists much uncertainty where milk prices will end up, particularly by summer and fall."

He says the recent dip in milk prices can be blamed on more milk available for cheese production, as well as higher milk components in total cheese production. Also, holiday orders had already been filled as of mid-December, which usually results in lower cheese prices at the end of the year.

"However, positive for cheese prices is stocks of cheese which were still tighter than a year ago with October 31st stocks 6.2-percent lower than a year ago," he said.