Dairy producers’ August milk checks should continue to improve, based on a preview of Federal Milk Marketing Order (FMMO) milk class prices. Announced on Sept. 5, all FMMO Class II, III and IV milk class prices were up slightly compared to a month earlier. And a narrowing of the Class III-IV milk price spread may reduce some incentives for Class IV depooling.
August 2024 FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released on Sept. 11-14 and summarized on Sept. 16. Watch Progressive Dairy’s website for an update.
August class prices
Class prices announced on Sept. 5 were:
- At $22.05 per hundredweight (cwt), the August Class II milk price is up 23 cents from July and $2.14 more than August 2023. It’s the highest since December 2022.
- The August Class III milk price erased a small decline in July, rising 87 cents to $20.66 per cwt, $3.47 more than August 2023 and the highest since November 2022.
- At $21.58 per cwt, the August 2024 Class IV milk price is up 27 cents from July and is $2.67 more than August 2023. It’s the highest since December 2023.
Potentially affecting FMMO pooling, the August 2024 Class IV milk price is 92 cents more than the month’s Class III milk price, the smallest gap since September 2023.
Supporting blend price strength, the August advanced Class I base price was previously announced at $21.32 per cwt, up 21 cents from July 2024 and $4.70 more than a year earlier. It’s the highest Class I base price since January 2023.
Butterfat, protein values mixed
Contributing to the August milk class price calculations, value changes for butterfat and protein were mixed.
While the value of butterfat dipped less than a penny from July, to about $3.56 per pound, the value of milk protein jumped almost 23 cents, to about $2.18 per pound, the highest since September 2023.
The value of nonfat solids was up about 3 cents at $1.05 per pound, while the value of other solids rose about 4 cents to 29.6 cents per pound.
Looking ahead
Based on FMMO advanced prices and current futures prices, the outlooks for September regional uniform milk prices improves again, especially strengthened by Class III milk.
Already announced, the September 2024 advanced Class I base price is $21.60 per cwt, up 28 cents from August 2024 and $2.70 more than a year ago. It’s again the highest Class I base price since January 2023.
September Class II, III and IV milk prices will be announced Oct. 2. As of trading on Sept. 5, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $20.66 per cwt for September, up $1.95 from the August price. It would be the highest in more than two years.
The Class IV milk futures price closed at $22.34 per cwt for September, up 76 cents from August and again the highest since November 2022.
If Class III-IV futures prices hold, the September Class III-IV milk price gap will shrink to just 27 cents, with the Class III milk price moving above the Class IV milk price for the first time since April 2023, ending Class IV depooling incentives.
