Here’s an update on economic factors impacting your dairy’s financial picture.
- April 2024 Class I base price inches higher
- Vitaliano: Key dairy statistics reveal continued production decline
- GDT index falls another 2.8%
- The clock is ticking to avoid a government shutdown this weekend
April 2024 Class I base price inches higher
The Federal Milk Marketing Order (FMMO) advanced Class I base price is inching higher. At $19.18 per hundredweight (cwt), the April 2024 price is 38 cents more than March 2024 and 33 cents more than April a year ago. It’s the first year-over-year increase since January 2022-23.
Through the first four months of 2024, the Class I base prices averaged $18.61 per cwt, a three-year low for the period.
Class I zone differentials are added to the base price at principal pricing points to determine the actual Class I price in each FMMO. With those additions, April Class I prices will average approximately $22 per cwt across all FMMOs, ranging from a high of $24.58 per cwt in the Florida FMMO to a low of $20.98 per cwt in the Upper Midwest FMMO.
The spread in the monthly advanced Class III skim milk pricing factor ($5.63 per cwt) and advanced Class IV skim milk pricing factor ($9.19 per cwt) narrowed slightly for April but remained wide at $3.56 per cwt.
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 $20.19 per cwt, about $1.01 more than the actual price determined using the “average-of plus 74 cents” formula.
Vitaliano: Key dairy statistics reveal continued production decline
Sluggish U.S. milk production is showing up in other key dairy industry statistics, according to National Milk Producers Federation’s Peter Vitaliano. Summarizing dairy markets in the March 2024 Dairy Management Inc./National Milk Producers Federation Dairy Market Report, he said these measures include scant milk solids production growth, flat to declining production of major dairy products and a general drawdown of product inventories.
The market is currently broadly balanced, with lower milk production, flat milk solids production and growth in overall domestic use, offset by continued weakness in exports. Stronger total demand and/or further reductions in milk production will be needed to bring higher milk prices faster.
For more information on commercial use, dairy trade, milk production, product inventories, prices and margins, view the March 2024 Dairy Market Report.
GDT index falls another 2.8%
The price index of dairy product prices sold on the Global Dairy Trade (GDT) platform fell by 2.8% in an auction held March 19. Compared to the previous auction, prices for individual product categories were mostly down. Only anhydrous milkfat posted an increase, up 2.5%. Lactose, skim milk powder and whole milk powder each fell by more than 4%, while butter, cheddar cheese and mozzarella decreased by 1%-2%. There was no change for buttermilk powder.
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 April 2.
The clock is ticking to avoid a government shutdown this weekend
Earlier this month, Congress approved fiscal year 2024 funding at $460 billion for the departments of Agriculture, Commerce, Justice, Veterans Affairs, Energy, Interior, Transportation, Housing and Urban Development, as well as the Food and Drug Administration, military construction and other federal programs.
Now, it must pass a separate six-bill funding package by the end of the day on Friday, March 22, to avert a partial government shutdown.
This morning, lawmakers unveiled a $1.2 trillion government funding package for the departments of Defense, Homeland Security, Labor, Health and Human Services, Education, State and the legislative branch.
The bill must be passed by the House of Representatives, Senate and signed by the president to complete the annual appropriations package. If not, there could be a short-term lapse in government funding over the weekend.
