Milk Prices Flatten as Milk Output Stays in High Gear!

WHEW! In my April report (put out March 25th) I stated that the March BFP would come in at $11.57 and explained what was behind the significant decline in the February BFP. For March I was off by only 5 cents and I can live with it! Now let's turn our attention to prices for April (to be announced on May 5). Using the same logic that I took you through in the last issue (and if you missed it you can find it on my OhioDairyWeb at the URL I think that the April BFP will be up slightly from the March BFP and will be announced at $11.71. My black box for coming up with this number is very transparent. This increase is due to a slight increase of 6 cents in the product price adjustment and the base month price being at or near the $11.62 March BFP

What's Ahead for the April BFP and Class Prices?

With March margins in the $1.48 range, the best bet is that cheese plants very likely will have paid close to the announced $11.62 for milk. The following table shows my method for getting a fix on the current month BFP. The gross value of cheese and butter/powder for each 100 pounds of milk has not changed much from March to April. Based on these gross values my calculations suggest that a BFP of $11.65 + $0.06 = $11.71 is a reasonable estimate. Looking at the CME BFP futures contract price trading on April 26th of $11.61, my estimate is not too far from the mark, although I am a little more bullish than the market.