The gap between January 2023 average “mailbox” prices and the comparable “all-milk” prices widened to about 82 cents per hundredweight (cwt), up from 70 cents in December. Based on a preliminary look at two USDA milk price announcements (Table 1):
- During January 2023, U.S. all-milk prices averaged $23.10 per hundredweight (cwt), down $1.60 per cwt from December 2022.
- The January 2023 mailbox prices for selected Federal Milk Marketing Orders (FMMOs) averaged $22.28 per cwt, down $1.72 per cwt from the month before.
All-milk prices are reported monthly by the USDA National Ag Statistics Service (NASS). The all-milk price is the estimated gross milk price received by dairy producers for all grades and qualities of milk sold to first buyers, before marketing costs and other deductions. The price includes quality, quantity and other premiums, but hauling subsidies are excluded.
The mailbox price is the estimated net price received by producers for milk, including all payments received for milk sold and deducting costs associated with marketing. Mailbox prices are reported monthly by the USDA’s Agricultural Marketing Service (AMS) and generally lag all-milk price announcements by a month or more.
The price announcements reflect similar – but not exactly the same – geographic areas.
The difference in the two announced prices can affect dairy risk management, since indemnity payments under the Dairy Margin Coverage (DMC) are based on the all-milk price, while Dairy Revenue Protection (Dairy-RP) and Livestock Gross Margin for Dairy (LGM-Dairy) programs are based on FMMO class and component prices.
