Individual Federal Milk Marketing Order (FMMO) uniform milk prices were mixed in April 2024, with slight gains in highest fluid milk utilization areas offset by lower prices elsewhere.
Administrators of the 11 FMMOs reported April prices and pooling data, May 10-14. Here’s Progressive Dairy’s monthly review of the numbers to provide some additional transparency to your milk check.
Uniform prices, PPDs
Compared with March, April 2024 statistically uniform milk prices were 19-20 cents per hundredweight (cwt) higher in Appalachian, Florida and Southeast FMMOs (Table 1), those with highest Class I milk (fluid) utilization. In contrast, biggest declines of 43-75 cents per cwt were in California and Upper Midwest marketing areas where Class III milk utilization was highest.
The highest uniform price for the month was in Florida at $23.94 per cwt, with the low in the Upper Midwest at $15.95 per cwt.
April baseline producer price differentials (PPDs) were higher across all applicable FMMOs (Table 1), with a high of $4.59 per cwt in the Northeast to a low of 45 cents in the Upper Midwest. PPDs have zone differentials, so actual amounts will vary within each FMMO. Milk handlers may apply PPDs and other “market adjustment factors” differently on your milk check.
Class prices for April
- Class I base price: The April 2024 advanced Class I base price was $19.18 per cwt, 38 cents more than March 2024 and 33 cents more than April a year ago. It was the first year-over-year increase since January 2022-23.
- Class I base with zone differentials: Adding zone differentials, April Class I prices averaged 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.
- Class I mover formula: 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.
- At $21.23 per cwt, the April Class II milk price was up 11 cents from March and $2.03 more than April 2023. It’s the highest since October 2023.
- At $15.50 per cwt, the Class III milk price fell 84 cents from March to a three-month low and was $3.02 less than April 2023.
- At $20.11 per cwt, the April 2024 Class IV milk price was up just 2 cents from March and was $2.16 more than April 2023. It was also the highest since November 2023. Potentially affecting FMMO pooling, however, the April 2024 Class IV milk price was $4.61 more than the month’s Class III milk price, the widest spread since October 2023.
Component values, tests
Contributing to the April milk class price calculations, the value of butterfat was up from the previous month, but the protein value declined to a historical low.
The value of butterfat increased almost a dime from March, to about $3.33 per pound. The value of milk protein fell 29 cents from March to just 83.5 cents per pound, the lowest since the last FMMO reform began in 2000.
The value of nonfat solids was down about 2.5 cents at 97.3 per pound, while the value of other solids fell about 5 cents, to 23.7 cents per pound.
Affecting statistical uniform prices “at test,” April average butterfat and protein tests in pooled milk were down compared to March in all FMMOs providing preliminary data.
Pooling totals
With one less milk marketing day compared with March, the total milk volume pooled through FMMOs in April was estimated at 12.76 billion pounds, about 415 million pounds less than the prior month. The USDA releases preliminary April milk production estimates on May 20.
April Class I pooling was up about 29 million pounds from the previous month. At 3.42 billion pounds, it represented 27% of total milk pooled. Class II pooling was down about 128 million pounds, to 1.15 billion pounds, representing about 9.1% of the total pooled.
Compared to a month earlier, April brought less Class III and Class IV milk to the pool (Table 2). At 7.24 billion pounds, Class III pooling was down 153 million pounds and represented about 57.1% of the total pool. Class IV pooling declined about 162 million pounds, to 865 million pounds, and represented 6.8% of the total milk pooled.
Looking ahead
May uniform prices and pooling totals will be announced on June 11-14. Based on FMMO advanced prices and current futures prices, milk class prices are mixed, with Class IV depooling incentives shrinking.
- Class I base price: The advanced Class I base price is reversing course, and the “average-of” Class I mover pricing formula is taking its biggest hit since late 2022. At $18.46 per cwt, the May 2024 advanced Class I base price is down 72 cents from April 2024 and $1.11 less than a year ago, and the lowest since February. Through the first five months of 2024, the Class I base prices average $18.58 per cwt, again a three-year low for the period.
- Class I base with zone differentials: Adding zone differentials, May Class I prices will average approximately $21.28 per cwt across all FMMOs, ranging from a high of $23.96 per cwt in the Florida FMMO to a low of $20.26 per cwt in the Upper Midwest FMMO.
- Class I mover formula: The spread in the monthly advanced Class III skim milk pricing factor ($3.88 per cwt) and advanced Class IV skim milk pricing factor ($8.99 per cwt) jumped for May to $5.11 per cwt, the widest since October 2022.
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 $20.21 per cwt, about $1.75 more than the actual price determined using the average-of plus 74 cents formula.
- Other class prices: May Class II, III and IV milk prices will be announced on June 5. As of the close of trading on May 14, the May Chicago Mercantile Exchange (CME) Class III milk futures price closed at $18.72 per cwt, up $3.22 from April and the highest since January 2023. The May Class IV milk futures price closed at $20.36 per cwt, up 25 cents.
- Class III-IV milk price spread: If those futures prices hold, the May Class III-IV spread will fall to $1.64, the slimmest since last September and reducing incentives for Class IV depooling.
Looking longer term, the June Class III futures price at the close of trading on May 14 was $20.86 per cwt, jumping above the June Class IV futures price of $20.80 per cwt. That would eliminate the Class IV FMMO depooling incentive for at least one month.
Other information
- The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report was released May 10. The milk production forecast for 2024 was raised from last month based on an increase in dairy cows and more rapid growth in output per cow. Milk production in 2025 is also forecast to increase from 2024, driven by higher milk per cow and an expanding milk cow herd.
- FMMO “mailbox” prices averaged about 96 cents per cwt less than announced average “all-milk” prices in January. It was the widest monthly spread since November 2022.
Check the Progressive Dairy website for the April milk production report on May 20 and the April Dairy Margin Coverage (DMC) program margin on May 31.
