Milk prices not likely to move much

WEST LAFAYETTE, Ind. – Dairy farmers shouldn’t expect record milk prices this year, but they can expect moderately strong prices for the rest of the year and early 2006, according to a Purdue University Cooperative Extension Service dairy specialist.
This year should finish up with an all-milk price of around $15.07, said Mike Schutz, which is only about $1 lower than the record price from 2004.
Looking into early 2006, the U.S. Department of Agriculture forecasts milk prices to be around $13.35.
Schutz said the prices are solid, considering most dairy producers probably budget a little bit less than that.
Weather. This summer’s weather may help keep milk prices up.
Prolonged periods of heat and humidity, like what occurred this past summer, cause cows to drop in production, said Schutz. He said this is due to reduced appetites, less feed consumption and the possibility of more problems with mastitis.
Eventually, that will begin to reduce milk production, and that lower production could linger into the fall, he said.
It is also possible the weather caused lower yields and poor quality crops, which could translate into lower milk production.
High production. But, for now, there is a slight chance prices could come down because there’s so much milk being produced.
Schutz said this partially depends on how long the demand for dairy products will be able to keep up with the tremendous amount of milk being produced.
Indiana and the nation are producing milk like never before. Both milk production per cow and overall dairy cow numbers are up.
Last year, Schutz said Indiana charged into the top 10 states for milk production per cow, and in July, total milk production in Indiana was up 7.7 percent compared to a year ago.
In addition, Monsanto is back to normal delivery levels for Posilac, its bovine somatotropin protein. In 2004, the company decreased delivery of Posilac to customers by 50 percent because of problems in a manufacturing facility.
Steady. Overall, Schutz said that though high volumes of milk production will cap prices to some extent, no major downturns are expected as long as economic conditions are favorable and dairy product sales remain brisk.