Even though Class III futures prices took a nice jump after Tuesday’s milk production report, Wisconsin economists are skeptical those prices will become reality when contracts expire.
The reason: Current cheese and whey prices only support about $14.85/cwt Class III price, points out Bob Cropp, a University of Wisconsin (UW) dairy economist. He says Class III prices could dip as low as the high $14s in the first quarter of 2016, and then slowly rebound throughout the year. He expects Class III prices to reach as high as $17 by October.
“2016 will be more for recovery time,” agrees Mark Stephenson, Cropp’s colleague at UW-Madison.
The two economists also see gradual trade liberalization as a result of the recently concluded Trans Pacific Partnership talks. There are no big changes, says Cropp, but the TPP agreement is “movement forward.”
“We have a crack in the door,” concurs Stephenson. Countries like Canada and Japan will have to think about more trade liberalization moving forward.
Get all their comments on a 11-minute video released this afternoon here.