Here’s an update on economic factors impacting your dairy profitability during the fourth week of January 2024.

Natzke dave
Dave Natzke
Editor / Progressive Dairy

February 2024 Class I base price lower

The Federal Milk Marketing Order (FMMO) advanced Class I base price is moving lower. At $17.99 per hundredweight (cwt), the February 2024 price is 49 cents less than January 2024 and $2.79 less than February a year ago.

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, February Class I prices will average approximately $20.81 per cwt across all FMMOs, ranging from a high of $23.39 per cwt in the Florida FMMO to a low of $19.79 per cwt in the Upper Midwest FMMO.

The spread in the monthly advanced Class III skim milk pricing factor ($4.73 per cwt) and advanced Class IV skim milk pricing factor ($9.29 per cwt) widened for February to $4.56 per cwt, the largest gap since August 2023.

Based on Progressive Dairy calculations, the Class I mover calculated under the “higher-of” formula would also have resulted in a Class I base price of $19.48 per cwt, about $1.49 more than the actual price determined using the “average-of plus 74 cents” formula.

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November 2023 fluid milk sales up slightly

For the second month in a row, overall fluid milk sales were up slightly compared to the same month a year earlier, according to data from the USDA Agricultural Marketing Service (AMS):

  • Total sales: November 2023 sales of packaged fluid milk products were estimated at 3.71 billion pounds, up 0.3% from the same month a year earlier. At 38.97 billion pounds, year-to-date (YTD) sales of all fluid products remain down 1.4%.
  • Conventional products: Monthly sales totaled 3.47 billion pounds, up 0.3% from the same month a year earlier, supported by increases in whole, flavored whole and low-fat (1%) categories. YTD sales totaled 36.37 billion pounds, down 1.4% from January-November 2022.
  • Organic products: November sales totaled 231 million pounds, up 0.4% from a year earlier, with largest increases in whole and flavored whole milk categories. At 2.59 billion pounds, YTD sales of all fluid organic products were down 1%. Organic represented about 6.2% total fluid product sales in November 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.

Another funding extension approved

Unfinished at last week’s Progressive Dairy deadline, Congress eventually approved another short-term continuing resolution (CR) to keep the government funded at fiscal year 2023 levels until March.

Four appropriations bills, scheduled to expire on Jan. 19, are extended until March 1. They cover: Agriculture, Rural Development, Food and Drug Administration; Energy and Water Development; Military Construction, Veterans Affairs; and Transportation, Housing and Urban Development.

Eight appropriations bills, scheduled to expire on Feb. 2, are be extended until March 8. They cover: Commerce, Justice and Science; Defense; Financial Services and General Government; Homeland Security; Interior and Environment; Labor, Health and Human Services and Education; Legislative Branch; and State and Foreign Operations.

Farm Credit East dairy outlook webinar is Jan. 24

Dairy economists Chris Wolf of Cornell University and Marin Bozic of the University of Minnesota will highlight Farm Credit East’s annual dairy outlook webinar, Jan. 24, 1 p.m. The webinar is free to attend for all interested dairy producers.

Wolf will provide an overview of the dairy economy, changes to milk production and sales in 2023, the state of dairy markets around the world and other factors that may influence the coming year for dairy producers, with a focus on the Northeast. Bozic will discuss risk management strategies in consideration of the market outlook. Visit the Farm Credit East website to register, or contact Chris Laughton at (800) 562-2235 for more information.

Coming up

There are several upcoming USDA dairy-related reports coming up during the next two weeks. Watch the Progressive Dairy website and digital newsletters for updates:

  • USDA’s Milk Production report, providing preliminary December and fourth-quarter 2023 estimates, will be released on Jan. 24.
  • Also on Jan. 24, the Cold Storage report will summarize dairy product inventories.
  • On Jan. 25, the Livestock Slaughter report summarizes December 2023 dairy cull cow marketing totals.
  • The monthly Ag Prices report is released on Jan. 31, and includes milk and feed price factors used to calculate the Dairy Margin Coverage (DMC) program margin and potential indemnity payments for December.
  • USDA’s Cattle report, which will be released Jan. 31, will provide milk cow and dairy replacement heifer estimates to start 2024.
  • Finally, also on Jan. 31, the USDA AMS announces January FMMO Class II, III and IV milk prices.