Dairy producers’ milk checks based on December 2023 Federal Milk Marketing Order (FMMO) blended milk class prices will likely be smaller this month.
Announced on Jan. 4, FMMO Class II, III and IV prices were all down from a month earlier, with only the Class I base milk price up, but just a penny. A wide Class III-IV price spread also maintains substantial Class IV depooling incentives.
December 2023 FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released on Jan. 11-14 and summarized on Jan. 15. Watch Progressive Dairy’s website for an update.
December class prices
Class prices announced on Jan. 4 were:
- At $19.88 per hundredweight (cwt), the December Class II milk price is down $1.33 from November and $3.23 less than December 2022.
- At $16.04 per cwt, the Class III milk price fell $1.11 from November and is $4.46 less than December 2022. It is the lowest since July.
- At $19.23 per cwt, the December 2023 Class IV milk price is down $1.64 from November and is $2.89 less than December 2022. Potentially affecting FMMO pooling, the December 2023 Class IV milk price is $3.19 more than the month’s Class III milk price.
The December 2023 advanced Class I base price was previously announced at $19.76 per cwt, up 1 cent from November and a 10-month high, but still $2.82 less than December 2022.
Annual price averages
With December prices, average 2023 milk classes prices were: Class I base – $19.20 per cwt, $4.46 less than 2022; Class II – $20.10 per cwt, down $5.17; Class III – $17.02 per cwt, $4.94 less than a year earlier; and Class IV – $19.12 per cwt, down $5.35 per cwt from 2022.
Butterfat value declines
Contributing to the December milk class price calculations, the declining value of butterfat was only partially offset by a smaller increase in the value of protein. The value of butterfat fell about 48 cents to $2.98 per pound, the first month under $3 per pound since July. The value of milk protein rose about 12.5 cents from November to about $1.35 per pound, a three-month high.
The value of nonfat solids rose slightly to about $1.01 per pound, while the value of other solids increased about 3.5 cents, to 22.4 cents per pound.
Looking ahead
Based on FMMO advanced prices and current futures prices, milk prices are headed lower for January production.
Already announced, the January 2024 advanced Class I base price is $18.48 per cwt, $1.28 less than December 2023 and $3.93 less than January a year earlier.
As of trading on Jan. 4, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $15.26 per cwt for January, down 78 cents from the December price. The Class IV milk futures price closed at $19.33 per cwt for January, up a dime from December.
If Class III-IV futures prices hold, the January Class III-IV milk price gap grows to $4.07 per cwt, expanding incentives for Class IV depooling.
