June Class I base announced; MILC estimate updated

The June 2012 federal order Class I base milk price is $15.24/cwt., down 61¢ from May 2012, and $5.08 less than June 2011. Through the first half of 2012, the Class I base average is $16.48/cwt., down $1.66 from $18.14/cwt. for the same period of 2011.

 

With the release of the June Class I base price, Brian Gould, University of Wisconsin-Madison dairy economist, updated estimates of future Milk Income Loss Contract (MILC) payments.  With this update, Gould also updated MILC program changes after August 2012.  As written in the 2008 Farm Bill, starting in September 2012 the base cost of production from which the determination of whether a MILC payment is forthcoming increases from the current $7.35/cwt to $9.50/cwt.  Also you should note that starting in Sept. 2012, the maximum amount of milk production eligible for MILC payments decreases from 2.985 million lbs. to 2.4 million lbs.  These changes will take effect if the 2012 Farm Bill is not enacted or some other legislative action is implemented.

 

 

2012 MILC payment forecasts (and actual payments*)

based on futures settlement prices, May 22, 2012

                          ($ per hundredweight)

                  Forecast                     Predicted 

                    Target     Forecast      MILC

Month         Mover       Mover       Payment

Jan. ’12        17.53*        18.80*        0.0000*

Feb. ’12        17.90*        17.03*        0.3895*

Mar. ’12        18.14*        16.30*         0.8262*

Apr. ’12        18.29         15.66*         1.1821

May ’12         17.51        15.85*         0.7478

June ’12       17.20        15.24           0.8803

July ’12        17.09        15.58           0.6810

Aug. ’12       16.64        16.08           0.2522

Sep. ’12        13.87        16.13          0.0000

Oct. ’12         13.77        16.20         0.0000

Nov. ’12        13.69        16.10         0.0000

Dec. ’12         13.69       15.99          0.0000

Jan. ’13         13.69       15.91         0.0000

Feb. ’13         13.69       15.81        0.0000

Mar. ’13         13.69        15.60        0.0000

*Actual Target, Target Mover, MILC Payment

Brian W. Gould, Associate Professor, Department of Agricultural and Applied Economics, University of Wisconsin-Madison ( http://future.aae.wisc.edu/collection/software/current_MILC_est.xls)