Federal Milk Marketing Order (FMMO) Class III and IV milk prices declined in November, and the spread between the two class prices narrowed.
What impact that has on prices and marketing will be revealed in mid-December, when FMMO pooling estimates, uniform prices and producer price differentials are scheduled to be released. Check back with Progressive Dairy for an update.
November class prices mixed
When calculating monthly FMMO uniform prices, the November advanced Class I base price was $24.09 per hundredweight (cwt), up $1.38 from October and $6.11 higher than November 2021. Adding zone differentials, November 2022 Class I prices will average approximately $26.91 per cwt across all FMMOs, with a high of $29.49 per cwt in the Florida FMMO 6 to a low of $25.89 per cwt in the Upper Midwest 30.
Other class prices announced on Nov. 30 are:
- At $24.67 per cwt, the November Class II milk price was down $1.06 from October but $6.27 more than November 2021.
- At $21.01 per cwt, the November 2022 Class III milk price fell 80 cents from October but is $2.98 more than November 2021. Through the first 11 months of 2022 the Class III milk price averaged $22.09 per cwt, $5.13 more than the same period a year earlier but 66 cents less than the January-November average in 2014.
- At $23.30 per cwt, the November 2022 Class IV milk price declined $1.66 from October but was $4.51 more than November 2021. The January-November 2022 average stands at $24.68 per cwt, $8.94 more than a year ago and $2.10 more than 11-month average in 2014.
The November 2022 Class IV milk price is $2.29 more than the month’s Class III milk price, down from $3.15 in October and $4.81 in September and the narrowest spread since June.
Butterfat value lower, protein value up
Leading to the decline in November Class III and IV milk prices, a drop in the value of butterfat offset a small gain in the value of protein.
The value of butterfat fell more than 28 cents from October’s record high to about $3.37 per pound, the lowest since July. It’s still the 10th straight month the butterfat value topped $3 per pound.
The value of milk protein rose 8.6 cents from October to just under $2.54 per pound, the highest since July.
The value of nonfat solids fell 8 cents to about $1.32 per pound, while the value of other solids dipped slightly to 28.4 cents per pound.
Prices headed lower; spread continues to narrow
Based on current milk futures prices, Class III-IV milk prices will decline in December, while the spread continues to narrow.
As of the close of trading on Nov. 30, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $19.83 per cwt for December; the Class IV milk futures price closed at $21.55 per cwt. If those prices hold, the December Class III-IV milk price gap will shrink to about $1.72 per cwt, the smallest difference since June.
Already announced at $22.58 per cwt, the December 2022 Class I base price is down $1.51 from November. With zone differentials, December 2022 Class I prices will average approximately $25.40 per cwt across all FMMOs, ranging from a high of $27.98 per cwt in the Florida FMMO 6 to a low of $24.38 per cwt in the Upper Midwest FMMO 30.
