Class III price advances

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The Class III price turned from its erring ways during April, although it did not venture above $10. Still, it may be a sign of better things to come.

The USDA announced the Class III price at $9.41 during April — 30 cents higher than March. Meanwhile, both the Class II and IV prices continued to go astray. The Class IV price fell 6 cents to $9.73. The USDA announced the April Class II price at $10.44 — 10 cents less than March. 

Is this the beginning of better milk prices? There are some signs that suggest it could very well be so, says Bob Cropp, dairy economist and professor emeritus at the University of Wisconsin.

For instance, cow numbers climbed just 2,000 head during March. If they show no increase — or better yet, start to decline — in the April “Milk Production” report, scheduled for release next week, it could have a “fairly significant impact on prices,” Cropp says.

Unfavorable weather this summer also could reduce milk production, and consequently, motivate milk prices. So, too, could the voluntary milk-supply reduction program proposed by the National Milk Producers’ Federation. “Anything that could reduce supply would make (an increase in milk prices) even more possible,” Cropp says.

And it looks like things could be improving on the demand side, too.

The Consumer Confidence Index rose sharply during April, ending a four-month period of declining confidence in the economy, notes Ken Bailey, Penn State dairy economist. “That is very important to the U.S. dairy industry,” Bailey says. “More consumer spending could result in greater demand for dairy products.”

Cropp predicts the milk price will move closer to $10 this month, and make a gradual ascent to $13 by September.


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