The figure below shows the month to month percent change in the 12 month rolling average for U.S. milk production over the time period 2000 to the most recent month for which production data is available. A 12 month rolling average provides an accurate assessment of the impact of net margins on milk production across the United States. The lowest Class 23 price after the peak in the growth rate for production is shown. There appears to be a pattern in that this low price occurs 3-4 months after the production growth peak is recorded. Periods of faster growth (averaging 12 months) are followed by periods of slower growth (averaging 15 months). Currently we are in a contraction period, with 3 months of slowing growth rate. The CME average Class 3 futures price for November 2012-April 2013 is at $18.39 and for the next 12 months is $18.45.
U.S. Dairy Cow Numbers: Change in milk cows from prior month