Milk checks for September production will again reflect stronger protein and Class III milk prices. That will change on October production, with struggling cheese prices weakening the Class III price and widening the Class III-IV price spread, adding substantial Class IV depooling incentives.
September class prices
Check Progressive Dairy’s website for an update on September 2023 FMMO pooling estimates, uniform prices and producer price differentials (PPDs) on Oct. 16. September Class prices announced on Oct. 4 were:
- At $19.98 per hundredweight (cwt), the September Class II milk price is up 7 cents from August and the highest since February but $6.53 less than September 2022.
- At $18.39 per cwt, the Class III milk price rose $1.20 from August and is the highest since January. It’s still $1.43 less than September 2022.
- At $19.09 per cwt, the September 2023 Class IV milk price is up 18 cents from August and is also the highest since January but is $5.54 less than September 2022. Potentially affecting FMMO pooling, the September 2023 Class IV milk price is 70 cents more than the month’s Class III milk price, the narrowest spread since April.
The September 2023 advanced Class I base price was previously announced at a four-month high of $18.90 per cwt, up $2.28 from August but still $4.72 less than September 2022.
Protein, butterfat values increase
Contributing to the September milk class price calculations, values of both protein and butterfat value increased again.
The value of milk protein jumped nearly 22 cents from August to about $2.30 per pound, the highest since April. The value of butterfat rose about 10.5 cents to $3.13 per pound, the highest since December 2022 and the second straight month above $3 per pound.
The value of nonfat solids dipped slightly to about 94 cents per pound, while the value of other solids increased 0.3 cent, to 9.9 cents per pound.
Looking ahead
Based on FMMO advanced prices and current futures prices, factors impacting overall milk prices for October are mixed.
Already announced, the October 2023 advanced Class I base price is $19.47 per cwt, up 57 cents from September and a five-month high but still $3.24 less than October 2022.
As of trading on Oct. 6, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $16.86 per cwt for October, down $1.53 from September. The Class IV milk futures price closed at $21.59 per cwt for October, up $2.50 from September.
If those prices hold, the October Class III-IV milk price gap jumps to nearly $4.75 per cwt, again adding substantial incentives for Class IV depooling.
Depending on milk handlers, October milk checks may face another driver: At least one major Midwest dairy co-op announced implementation of a substantial "market adjustment" deduction.
