The USDA posted their outlook on June 17, 2009. By their data, we have reached bottom and by the start of 2010, Class III prices should be $2.62/cwt better than the comparable period in 2009.
As shown on the above graph, the Class III Milk Prices are obviously linked very tightly to the Cheddar cheese prices (April 7 post) .
The USDA outlook model is based on a pretty significant decrease in the number of dairy cows, a decrease of 345,000 cows or 3.7% from the herd highs reached in the 2nd quarter of 2008. As of now, cow numbers are down only 75,000, so we have a good way to go to reach 345,000 fewer cows.
The USDA outlooks do not detail their assumptions on exchange rates except for rationalizing history. There may be more upside to the cheese pricing numbers if the dollar continues to weaken, especially against the New Zealand Dollar. The most recent data continues to go in the right direction.
We still have some tough times in the coming months. We'll review the June status on cheese prices in the next post.
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