Update highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Dairy organizations submit modified proposals for possible hearing

The schedule for potential modernization of the Federal Milk Marketing Order (FMMO) system has moved another step. Following a pre-hearing informational session on June 16, 10 organizations submitted revised proposals for consideration during a formal hearing process.

The International Dairy Foods Association submitted two proposals, addressing the Class I mover and make allowances, separately. Other organizations submitting modified proposals included: the American Farm Bureau Federation, the California Dairy Campaign, Cedar Grove Cheese, the Dairy Pricing Association, Edge Dairy Farmer Cooperative, Milk Innovation Group, National All Jersey, the National Milk Producers Federation and the Wisconsin Cheese Makers Association. Find all revised proposals on the USDA FMMO petition website.

The USDA Agricultural Marketing Service (AMS) will now evaluate the modified proposals to determine whether each will be accepted in a formal hearing – if it is held.

If the USDA moves forward with a formal hearing process, it will be published in the Federal Register by late July, with a tentative hearing date set for Aug. 23.

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July 2023 Class I base price hits 21-month low

The FMMO advanced Class I base price continues its descent in July, falling to the lowest level since October 2021. At $17.32 per hundredweight (cwt), the July 2023 Class I base is down 69 cents from June and $8.55 less than July 2022.

Class I zone differentials are added to the base price at principle pricing points to determine the actual Class I price in each FMMO. With those additions, July Class I prices will average approximately $20.14 per cwt across all FMMOs, ranging from a high of $22.72 per cwt in the Florida FMMO 6 to a low of $19.12 per cwt in the Upper Midwest FMMO 30.

Analyzing the Class I mover, the spread in the monthly advanced Class III skim milk pricing factor ($5.33 per cwt) and advanced Class IV skim milk pricing factor ($8.94 per cwt) is $3.61 per cwt, the widest spread since October 2022.

Based on Progressive Dairy calculations, the Class I mover calculated under the “higher-of” formula would have resulted in a Class I base price of $18.34 per cwt, about $1.02 more than the actual price determined using the “average-of plus 74 cents” formula.

April 2023 fluid milk sales down

With inflation likely a factor, fluid milk sales trended sharply lower in April across nearly all product categories, according to monthly data from the USDA AMS:

  • Total sales: Sales of packaged fluid milk products totaled about 3.4 billion pounds, down 6.7% from the same month a year earlier. At 14.3 billion pounds, year-to-date (YTD) sales of all fluid products were down 2.7%.
  • Conventional products: Monthly sales totaled 3.18 billion pounds, down 6.5% from the same month a year earlier. YTD sales totaled 13.36 billion pounds, down 2.8% from January-April 2022.
  • Organic products: April sales totaled 219 million pounds, down 8.8% from a year earlier. At 951 billion pounds, YTD sales of all fluid organic products were down 1.4%. Organic represented about 6.4% total fluid product sales in April and 6.6% YTD.

The U.S. figures are based on consumption of fluid milk products in FMMO areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.

May dairy cull cow marketing summarized

May U.S. dairy cull cow marketing picked up slightly as milk income fell and margins tightened.

The number of dairy cull cows marketed through U.S. slaughter plants was estimated at 249,100 in May 2023, up 5,500 from April 2023 and 23,900 more than May 2022.

May 2023 had 27 non-holiday weekdays and Saturdays, two more than than April 2023 and one more than May 2022. Slaughter averaged 9,200 head per day, an eight-month low.

The USDA estimated there were 9.43 million dairy cows in U.S. herds in May 2023, unchanged from April and putting the May culling rate at about 2.6%. Year-to-date January-May dairy cull cow slaughter now stands at 1.363 million head, up 75,700 from the same period a year earlier.

Heaviest dairy culling during May again occurred in the Southwest (Arizona, California, Hawaii and Nevada) at 62,500 head and Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 58,700 head. 

Other monthly regional totals were estimated at 35,000 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 34,000 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas; and 32,100 head in Alaska, Idaho, Oregon and Washington.

Primary data for the USDA’s Livestock Slaughter report is obtained from reports from about 900 federally inspected plants and nearly 1,900 state-inspected or custom-exempt slaughter plants.

GDT index unchanged; butter and cheese prices mixed

As an indicator of world dairy prices, the latest Global Dairy Trade (GDT) price index was unchanged in an auction held June 20.  Prices in individual product categories were again mixed:

  • Skim milk powder (SMP) was down 2.3% to $2,667 per metric ton (MT, or about 2,205 pounds).
  • Whole milk powder was unchanged at $3,172 per MT.
  • Anhydrous milkfat was up 0.5% to $4,758 per MT.
  • Butter was up 5.5% to $5,739 per MT.
  • Cheddar cheese was down 3.3% to $4,533 per MT.

The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland).

The next GDT auction is July 4.