"March milk prices are at the bottom and things will get better from here,” says Bob Cropp, a University of Wisconsin professor emeritus and long-time dairy economist. Cropp made his predication at the Central Plains Dairy Expo in Sioux Falls this week.
"Things will get better from here,” he says.
Cropp says prices should slowly rally from their lows this spring on through next fall, with the fourth quarter all-milk price to average in the $14.65 to $15.75/cwt range. For the year, he expects that all-milk price to range from $12.90 to $13.65/cwt, or $4.65 to $5.40 less than 2008.
Nevertheless, Cropp's predictions are far better than USDA's, which forecasts an all-milk price range of $11.25 to $11.85 for 2009.
"And I think there is the probability of stronger milk prices than I have forecast. It still won't be a great year, but it will be better than USDA is forecasting,” he says. "The probability is high for a much improved prices for 2010.”
He also notes that milk price risk and volatility is very real. "Sharply changing milk prices are now the norm. Dairy producers need to manage price risk for both milk prices and feed costs,” he says.
While near-term milk futures opportunities don't exist, there are windows of opportunities later in the year. "Some are also advising to protect some of your feed costs,” says Cropp.