Individual Federal Milk Marketing Order (FMMO) uniform milk prices were again mixed in May 2024, this time with slight declines in highest fluid milk utilization areas offset by big jumps in those pooling more Class III milk.

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Administrators of the 11 FMMOs reported May prices and pooling data, June 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 April, May 2024 statistically uniform milk prices were 3-48 cents per hundredweight (cwt) lower in Appalachian, Florida and Southeast FMMOs (Table 1), those with highest Class I milk (fluid) utilization. In contrast, increases of $1.14-$2.79 per cwt occured in marketing areas where Class III milk utilization was the highest.

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Despite that, the highest uniform price for the month was in Florida at $23.46 per cwt, with the low in the Upper Midwest at $18.79 per cwt.

May baseline producer price differentials (PPDs) were down across all applicable FMMOs (Table 1), with a high of $2.34 per cwt in the Northeast to a low of 19 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.

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Class prices for May

  • Class I base price: The May 2024 advanced Class I base price was $18.46 per cwt, 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 averaged $18.58 per cwt, again a three-year low for the period.
  • Class I base with zone differentials: Adding zone differentials, April Class I prices averaged 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.

  • At $21.50 per cwt, the May Class II milk price was 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 was up 39 cents from April and is $2.40 more than May 2023. It’s also the highest since November 2023.

The May 2024 Class IV milk price was $1.95 more than the month’s Class III milk price, down from $4.61 in April and the narrowest spread since September 2023. That smaller spread, however, did little to bring Class IV milk to the FMMO pool (see below).

Component values, tests

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.

Affecting statistical uniform prices “at test,” May average butterfat and protein tests in pooled milk were down compared to April in nearly all FMMOs providing preliminary data.

Pooling totals

With one more milk marketing day compared with April, the total milk volume pooled through FMMOs in May was estimated at 12.86 billion pounds, about 193 million pounds more than the prior month. The USDA releases preliminary May milk production estimates on June 21.

May Class I pooling was up about 63 million pounds from the previous month. At 3.35 billion pounds, it represented 26% of total milk pooled. Class II pooling was down about 60 million pounds to 1.09 billion pounds, representing about 8.5% of the total pooled.

Compared to a month earlier, May brought more Class III and Class IV milk to the pool (Table 2). At 7.55 billion pounds, Class III pooling was up 313 million pounds and represented about 58.7% of the total pool. Class IV pooling increased just 2.8 million pounds, to 868 million pounds, and represented 6.7% of the total milk pooled.

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Looking ahead

June uniform prices and pooling totals will be announced on July 11-14. Based on FMMO advanced prices and current futures prices, the outlook for June milk prices is brighter.

  • Class I base price: At $20.08 per cwt, the June 2024 advanced Class I base price is 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. Through the first six months of 2024, the Class I base prices averages $18.83 per cwt, still a three-year low for the period.
  • Class I base with zone differentials: Adding zone differentials, June Class I prices will average approximately $22.90 per cwt across all FMMOs, ranging from a high of $25.48 per cwt in the Florida FMMO to a low of $21.88 per cwt in the Upper Midwest FMMO.
  • Class I mover formula: The spread in the monthly advanced Class III skim milk pricing factor ($6.29 per cwt) and advanced Class IV skim milk pricing factor ($8.88 per cwt) narrowed for June to $2.51 per cwt, the smallest gap since October 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 $20.57 per cwt, about 49 cents more than the actual price determined using the average-of plus 74 cents formula.

  • Other class prices: June Class II, III and IV milk prices will be announced on July 3. As of the close of trading on June 14, the June Chicago Mercantile Exchange (CME) Class III milk futures price closed at $19.87 per cwt, up $1.32 from May and the highest since December 2022. The June Class IV milk futures price closed at $21.15 per cwt, up 65 cents and the highest since October 2023.
  • Class III-IV milk price spread: If those futures prices hold, the June Class III-IV spread will fall to $1.28, the slimmest since last September.

Other information

  • The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report was released June 12. Milk production forecasts for both 2024 and 2025 were unchanged from last month with slight adjustments to cow inventories offset by slower growth in milk output per cow.
  • Better whey and butterfat product exports, along with the ever-growing cheese category, helped settle U.S. dairy product exports at a 3% rise in April, marking the second month of the year to record growth.

Check the Progressive Dairy website later this month for milk production, cull cow marketing, risk management and Dairy Margin Coverage (DMC) program margin updates.