Dairy producers’ May milk checks should be stronger based on a preview of Federal Milk Marketing Order (FMMO) milk class prices and a seven-month high in the component value of protein.
Announced on June 5, FMMO Class II, III and IV prices were all higher compared to a month earlier, with a big jump in the Class III milk price leading the charge. The narrower Class III-IV price spread will cut into Class IV depooling incentives.
May 2024 FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released on June 11-14 and summarized on June 17. Watch Progressive Dairy’s website for an update.
May class prices
Class prices announced on June 5 were:
- At $21.50 per hundredweight (cwt), the May Class II milk price is up 27 cents from April and $2.39 more than May 2023. It’s the highest since October 2023.
- At $18.55 per cwt, the Class III milk price jumped $3.05 from April to a 17-month high and is $2.44 more than May 2023.
- At $20.50 per cwt, the May 2024 Class IV milk price is up 39 cents from April and is $2.40 more than May 2023. It’s also the highest since November 2023.
Potentially affecting FMMO pooling, the May 2024 Class IV milk price is $1.95 more than the month’s Class III milk price, down from $4.61 in April and the narrowest spread since September 2023.
One setback in May, the advanced Class I base price was previously announced at $18.46 per cwt, down 72 cents from April 2024 and $1.11 less than a year ago, and the lowest since February.
Butterfat value up; protein value jumps
Contributing to the May milk class price calculations, the value of butterfat and protein were both up from the previous month.
The value of butterfat increased more than 13 cents from April to about $3.46 per pound. The value of milk protein jumped more than 90 cents to $1.73 per pound, the highest since September 2023.
The value of nonfat solids was down about 0.8 cent at 96.5 cents per pound, while the value of other solids fell about 2 cents to 21.8 cents per pound.
Looking ahead
Based on FMMO advanced prices and current futures prices, the outlook for June milk prices will improve.
Already announced, the June 2024 advanced Class I base price is $20.08 per cwt, up $1.62 from May 2024 and $2.07 more than a year ago. It’s the highest Class I base price since February 2023.
As of trading on June 4, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $19.85 per cwt for June, up $1.30 from the May price. The Class IV milk futures price closed at $21.34 per cwt for June, up 84 cents from May. If Class III-IV futures prices hold, the June Class III-IV milk price gap will shrink to $1.49 per cwt, a 10-month low and reducing some incentives for Class IV depooling.
