Federal Milk Marketing Order (FMMO) Class III and IV milk prices reversed course in May, with Class IV returning above Class III and creating a wide price spread.
May class prices
May 2023 FMMO pooling estimates, uniform prices and producer price differentials are scheduled to be released next week. Two of four milk class prices declined from April, with a sharp decline in the Class III price.
Class prices announced on June 1 were:
- At $19.11 per cwt, the May Class II milk price is down 9 cents from April and $6.76 less than May 2022.
- At $16.11 per cwt, the Class III milk price fell $2.41 from April and is $9.10 less than May 2022 and the lowest since August 2021.
- At $18.10 per cwt, the May 2023 Class IV milk price rose 15 cents from April but is $6.89 less than May 2022.
Potentially affecting FMMO pooling, the May 2023 Class IV milk price is $1.99 more than the month’s Class III milk price, providing substantial incentive for Class IV depooling.
In addition to Class II-III-IV prices announced above, the May 2023 advanced Class I base price was previously announced at $19.57 per cwt, up 72 cents from April but $5.88 less than May 2022.
Protein value plummets
Contributing to the May milk class price calculations, the butterfat value improved slightly while the value of protein fell to a four-year low.
The value of butterfat rose to about $2.76 per pound, up almost 6 cents from April and the highest since January. It’s still the fifth consecutive month the value of butterfat dropped below $3 per pound.
The value of milk protein fell 76 cents from April to about $1.80 per pound, the lowest since pre-pandemic March 2019.
The value of nonfat solids fell about one-half cent, to about 97 cents per pound, while the value of other solids dropped 6 cents, to just under 19 cents per pound.
Looking ahead
Based on current milk futures prices, Class III-IV milk prices will continue the May trends into June.
As of the close of trading on June 1, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $15.63 per cwt for June, down another 48 cents from May, then moved about $1 higher to $16.56 per cwt in July. The Class IV milk futures price closed at $18.18 per cwt for June and rose to $18.36 per cwt for July.
If those prices hold, the June Class III-IV milk price gap will hit $2.55 per cwt in June and $1.80 per cwt in July, maintaining incentives to depool Class IV milk.
Already announced, June 2023’s advanced Class I base price is $18.01 per cwt, down $1.56 from May, $7.86 less than June 2022 and the lowest since November 2021.
