The good news: Federal Milk Marketing Order (FMMO) Class III and IV and Class milk prices are higher in October, and the spread between the two class prices narrowed somewhat. Whether that’s enough to bring more Class IV milk back to FMMO pools will be revealed next week, when milk pooling estimates, uniform prices and producer price differentials are scheduled to be released, Nov. 11-14. There’s also the unknown regarding “marketing adjustments” to actual prices received by dairy producers. Check back with Progressive Dairy for an update.
October class prices
When calculating monthly FMMO uniform prices, the October advanced Class I base price was $22.71 per hundredweight (cwt), down 91 cents from September. Adding zone differentials, October 2022 Class I prices will average approximately $25.53 per cwt across all FMMOs, ranging from a high of $28.11 per cwt in the Florida FMMO 6 to a low of $24.51 per cwt in the Upper Midwest FMMO 30.
Other class prices announced on Nov. 2 are:
- At $25.73 per cwt, the October Class II milk price was down 78 cents from September but $8.65 more than October 2021.
- At $21.81 per cwt, the October 2022 Class III milk price jumped $1.99 from September and is $3.98 more than October 2021. Through the first 10 months of 2022, the Class III milk price averaged $22.20 per cwt, $5.34 more than the same period a year earlier but 63 cents less than the January-October average in 2014.
- At $24.96 per cwt, the October 2022 Class IV milk price rose 33 cents from September and was $7.92 more than October 2021. The January-October 2022 average stands at $24.82 per cwt, $9.39 more than a year ago and $1.81 more than 10-month average in 2014.
Based on FMMO milk class prices announced on Nov. 2, the October 2022 Class IV milk price is $3.15 more than the month’s Class III milk price, down from $4.81 in September and the narrowest spread since June. However, in several FMMOs, the Class IV price will also be above the Class I price.
Butterfat, protein values up
Supporting the stronger October Class III and IV milk prices, the value of both butterfat and protein rose from the month before.
The value of butterfat rose about 9 cents from September to nearly $3.66 per pound, the highest on record. It’s the ninth straight month the butterfat value topped $3 per pound.
The value of milk protein jumped almost 57 cents from September to about $2.45 per pound, the highest since July.
The value of nonfat solids and other solids were fairly steady at $1.40 and 29.5 cents per pound, respectively.
Spread continues to narrow
Based on current milk futures prices, Class III-IV milk prices will decline in November, while the spread continues to narrow.
As of the close of trading on Nov. 2, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $20.68 per cwt for November; the Class IV milk futures price closed at $22.35 per cwt. If those prices hold, the November Class III-IV milk price gap will shrink to about $1.67 per cwt, the smallest difference since June.
At $1.31, the gap between Class III-IV futures prices declines in December, with both continuing to weaken into the first quarter of 2023.
