The four highest average Class III milk price years in history have all happened since 2007. This year is virtually certain to make it five … and be the third highest ever.
As seen in the table above, current futures prices at the Chicago Mercantile Exchange say 2014 will be the sixth highest year ever. Unfortunately, they also say it will be roughly $1 per hundredweight less than this year.
The reason for the dip is high confidence that there will be plenty of milk and feed to go around, both in the U.S. and in other major dairy-exporting nations.
It is unknown, of course, whether feed and total production costs will fall even more than milk prices, but even better producer margins are a possibility.
What's encouraging to notice is that CME traders expect the smooth, stable trend in month-to-month prices will get even smoother in 2014. Class III prices varied by more than $8 in 2011 and by more than $5 in 2012.
The high-low spread will likely be less than $2 this year and in 2014 it is projected to be well under $1. That's great news for an industry like dairying that thrives on consistency.
