Individual Federal Milk Marketing Order (FMMO) uniform milk prices rose in June 2024, in some areas hitting the highest averages since the end of 2022. Administrators of the 11 FMMOs reported June prices and pooling data, July 10-13. Here’s Progressive Dairy’s monthly review of the numbers to provide some additional transparency to your milk check.

Natzke dave
Dave Natzke
Editor / Progressive Dairy

Uniform prices, PPDs

Compared with May, June 2024 statistically uniform milk prices were up $1 or more per hundredweight (cwt) across nearly all FMMOs (Table 1). The highest uniform price for the month was in Florida at $24.72 per cwt, with the low in the Upper Midwest at $20.05 per cwt.

60052-natzke-fmmo-tb1.jpg

June baseline producer price differentials (PPDs) were mixed in a narrow range across all applicable FMMOs (Table 1), with a high of $1.96 per cwt in the Northeast to a low of 18 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 June

  • Class I base price: At $20.08 per cwt, the June 2024 advanced Class I base price was up $1.62 from May 2024 and $2.07 more than a year ago. It was the highest Class I base price since February 2023.
  • Class I base with zone differentials: Adding zone differentials, June Class I prices averaged 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.

  • At $21.60 per cwt, the June Class II milk price was up 10 cents from May and $2.77 more than June 2023. It was the highest since October 2023.
  • At $19.87 per cwt, the Class III milk price jumped another $1.32 from May to an 18-month high and is $4.96 more than June 2023.
  • At $21.08 per cwt, the June 2024 Class IV milk price was up 58 cents from May and was $2.82 more than June 2023. It was also the highest since October 2023.

Potentially affecting FMMO pooling, the June 2024 Class IV milk price was $1.21 more than the month’s Class III milk price, down from $1.95 in May and the narrowest spread since September 2023.

Advertisement

Component values, tests

Contributing to the June milk class price calculations, the value of butterfat and protein were again both up from the previous month.

The value of butterfat increased about 8 cents from May, hitting about $3.54 per pound. The value of milk protein rose nearly 32 cents to $2.05 per pound, the highest since September 2023.

The value of nonfat solids was up about 3.5 cent at 99.9 cents per pound, while the value of other solids rose about 1.5 cents to 23.3 cents per pound.

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

Pooling totals

With one less milk marketing day compared with May, the total milk volume pooled through FMMOs in June was estimated at 12.27 billion pounds, about 588 million pounds less than the prior month. The USDA releases preliminary June milk production estimates on July 23.

With school lunch program closures for the summer, June Class I pooling was down about 384 million pounds from the previous month. At 2.97 billion pounds, it represented 24% of total milk pooled. Class II pooling was up about 101 million pounds, to 1.19 billion pounds, representing about 9.7% of the total pooled.

Compared to a month earlier, June brought less Class III but slightly more Class IV milk to the pool (Table 2). At 7.16 billion pounds, Class III pooling was down 387 million pounds and represented about 58.4% of the total pool. Class IV pooling increased nearly 82 million pounds, to 950 million pounds, and represented 7.7% of the total milk pooled, both three-month highs.

60052-natzke-fmmo-tb2.jpg

Looking ahead

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

  • Class I base price: Already announced, the July 2024 advanced Class I base price is $21.11 per cwt, up $1.03 from June 2024 and $3.79 more than a year ago. It’s the highest Class I base price since January 2023.
  • Class I base with zone differentials: 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, July Class I prices will average approximately $23.93 per cwt across all FMMOs, ranging from a high of $26.51 per cwt in the Florida FMMO to a low of $22.91 per cwt in the Upper Midwest FMMO.
  • Class I mover formula: For the first month since last October, the 2018 Farm Bill change to the Class I pricing formula paid a small dividend for producers. The spread in the monthly advanced Class III skim milk pricing factor ($7.72 per cwt) and advanced Class IV skim milk pricing factor ($8.93 per cwt) narrowed for July to $1.21 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 $20.97 per cwt, about 14 cents less than the actual price determined using the average-of plus 74 cents formula.

Since that formula change in May 2019, the American Farm Bureau estimates dairy producer losses have topped $1 billion. A change in the formula back to higher-of calculations is included in both the FMMO modernization proposal and in preliminary versions of House and Senate farm bills.

  • Other class prices: July Class II, III and IV milk prices will be announced July 31. As of trading on July 15, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $19.77 per cwt for July, which would be down a dime from the June price. The Class IV milk futures price closed at $21.41 per cwt for July, up 33 cents from June.

If Class III-IV futures prices hold, the July Class III-IV milk price gap will increase to $1.64 per cwt, providing some slight incentives for Class IV depooling.

Other information

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