COL Cropp says milk price has hit low
Milk prices took an unexpected tumble in March, dropping to $10.65 from $11.63 per hundred pounds in February, according to the U.S. Department of Agriculture.
The base price for Class III milk, which is used to manufacture cheese, tends to move up and down with cheese sales, and cheese sales have been soft, said Bob Cropp, UW-Madison dairy economist.
"The good news, I think, is that this will be the low for the year," he said.
He expects the base price to go over $11 per hundred pounds for April and over $12 per hundred pounds by summer. There about 12 gallons in a hundred pounds of milk.
"There's some indication that cheese sales are improving," Cropp said. "We think the economy will pick up and we'll see some improvement there."
Sales of dairy products slowed after the Sept. 11 terrorist attacks.
Analysts say that fewer people are eating out at restaurants, where much of the nation's cheese is consumed.
While 2002 is unlikely to be as strong a year for milk prices as 2001, Cropp does not expect the extremely low milk prices that farmers received in 1999.
On average, Wisconsin dairy farmers receive an additional $2 per hundred pounds that processors pay in premiums for quantity, high protein and fat content and milk free of infection indicators.
While the break-even point varies from farm to farm, banks often use $12.50 per hundred pounds as the level farmers need to cover their cash costs, Cropp said.