Prices are higher now, but the long-term picture is more bearish. The potential for production increase is great, and farmers are intent on making up for lost income. Traders can sense this, resulting in lower futures prices next year.
The August Class III and Class IV milk prices are the highest since late 2008. Class III was announced last Friday at $15.18cwt., with Class IV at $15.61/cwt. Continued strength in cheese and butter prices is certainly improving cash flow. September Class III futures are indicating a price above $16.00 for the first time since October 2008. Cheese and butter prices have now exceeded most everyone’s expectations.