Federal Milk Marketing Order (FMMO) regional uniform milk prices were lower in December. For many regions, those monthly uniform prices were the lowest since May.
Administrators of the 11 FMMOs reported December prices and pooling data, Jan. 11-14. Here’s Progressive Dairy’s monthly review of the numbers to provide some additional transparency to your milk check.
Uniform prices, PPDs
Compared with November, December 2024 statistically uniform milk prices declined in all 11 FMMOs (Table 1). Nine of 11 FMMOs saw price declines of $1 per cwt or more from the previous month.
Among individual orders, the top average was $25.44 per hundredweight (cwt) in Florida, down $1.35 cents from November and the lowest since June 2024. The low average was in the Upper Midwest FMMO, at $18.98 per cwt, also down $1.35 from November and a seven-month low.
Compared to November, December base producer price differentials (PPDs) were up slightly in six applicable FMMOs (Table 1) but lower in the Upper Midwest. PPDs have zone differentials, and milk handlers may also apply PPDs and other “market adjustment factors” differently on your milk check.
Class prices for December
All milk class prices were lower in December.
- Class I base price: After hitting a two-year high in October, the Class I base price fell again to end 2024. At $21.43 per cwt, the December price was down $1.10 from November 2024. Despite the decline, the December price was still $1.67 per cwt above December 2023.
The 2024 average Class I base price was $20.35 per cwt, up $1.15 from a year ago and the third-highest annual average in the past decade. Previous high annual averages were $23.66 per cwt in 2022 and $23.29 per cwt in 2014.
- 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, December Class I prices averaged approximately $24.25 per cwt across all FMMOs, ranging from a high of $26.83 per cwt in the Florida FMMO to a low of $23.23 per cwt in the Upper Midwest FMMO.
- Class I mover formula: The spread in the monthly advanced Class III skim milk pricing factor ($9.70 per cwt) and advanced Class IV skim milk pricing factor ($10.77 per cwt) narrowed to $1.07 per cwt for December. That means that the current Class I mover formula positively impacted Class I prices slightly, and for the fourth time in the second half of the year.
Based on Progressive Dairy calculations, using the Class I mover calculated under the “higher-of” formula would have resulted in a Class I base price about 21 cents less than the actual price determined using the “average-of plus 74 cents” formula.
For the year, the preliminary Class I price under the average-of formula was about 55 cents less than the price calculated under the higher-of formula. A change in the formula back to higher-of calculations is included in the FMMO modernization proposal.
- At $21.28 per cwt, the December Class II milk price was down 24 cents from November but $1.40 more than December 2023.
- The December Class III milk price fell $1.33 from November to $18.62 per cwt. While still up $2.58 from December 2023, it’s the lowest Class III milk price since May 2024.
- At $20.74 per cwt, the December 2024 Class IV milk price was down 38 cents from November. While still $1.51 higher than December 2023, it’s also the lowest since May 2024.
Affecting FMMO pooling, the gap between the December 2024 Class III and Class IV milk price jumped to $2.12 per cwt, the widest spread since April 2024 and again providing strong incentives for depooling Class IV milk.
Component values, tests
Contributing to the December milk class price calculations, values for butterfat and protein were both down from a month earlier.
The value of butterfat fell 15 cents per pound from November to about $2.91 per pound. It’s the lowest since July 2023.
Meanwhile, the value of milk protein dipped another 35 cents per pound from November to about $1.96 per pound, the lowest since July 2024.
Compared to November, the December value of nonfat solids was up about 2 cents at $1.215 per pound, while the value of other solids rose about 4.5 cents, to 44.9 cents per pound.
Affecting statistical uniform prices “at test,” December average butterfat and protein tests in pooled milk were mostly steady compared to November in many FMMOs providing preliminary data. Somatic cell counts were also down slightly, providing additional price support. Butterfat, protein and somatic cell count premiums could help offset some of the declines in uniform prices.
There were some amazing component numbers to end the year. For example, December butterfat tests in pooled milk averaged 4.66% in the Pacific Northwest and 4.5% in the Southwest FMMO. Those two marketing areas had average protein tests of 3.57% and 3.51%, respectfully.
Pooling totals
The USDA releases preliminary December milk production estimates on Jan. 24. With one more marketing day compared with November, the total milk volume pooled through FMMOs in December was estimated at 11.84 billion pounds, about 86.5 million pounds more than the prior month. Virtually all of that increase was powered by growth in Class III milk volume. With the Class III-IV milk price gap, December again brought more Class III milk to the pool, but Class IV milk volume was again lower (Table 2).
December Class I pooling was up about 97 million pounds from the previous month. At 3.53 billion pounds, it represented about 29.8% of total milk pooled. Class II pooling was down about 266 million pounds, to 1.17 billion pounds, representing about 9.9% of the total pooled.
At 6.27 billion pounds, Class III pooling was up 750 million pounds from November and represented about 52.9% of the total pool. Both volume and percentage were highest since August.
In contrast, December 2024 Class IV pooling decreased about 495 million pounds from November, to about 870.5 million pounds, and represented just 7.4% of the total milk pooled. Both volume and percentage were the lowest since July.
Looking ahead
January uniform prices and pooling totals will be announced on Feb. 11-14. Based on FMMO advanced prices and current futures prices, monthly uniform prices will be mixed.
- Class I base price: Already announced, the January 2025 advanced Class I base price is $20.38 per cwt, down $1.05 from December 2024 and the lowest since June 2024. Despite the decline, the January 2025 price is still $1.90 per cwt above January 2024.
- Class I base with zone differentials: Class I zone differentials are added to the base price at principle pricing points to determine the actual Class I price in each FMMO. With those additions, January Class I prices will average approximately $23.20 per cwt across all FMMOs, ranging from a high of $25.78 per cwt in the Florida FMMO to a low of $22.18 per cwt in the Upper Midwest FMMO.
- Class I mover formula: The spread in the monthly advanced Class III skim milk pricing factor ($8.54 per cwt) and advanced Class IV skim milk pricing factor ($10.95 per cwt) grew to $2.41 per cwt for January. That means that the current Class I mover formula negatively impacted Class I prices.
Based on Progressive Dairy calculations, using the Class I mover calculated under the higher-of formula would have resulted in a Class I base price about 44 cents more than the actual price determined using the average-of plus 74 cents formula.
- Other class prices: January Class II, III and IV milk prices will be announced on Feb. 5. As of trading on Jan. 14, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $20.27 per cwt for January, up $1.65 from the December price. The January Class IV milk futures price closed at $20.98 per cwt, up 24 cents from December.
If Class III-IV futures prices hold, the January Class III-IV milk price gap will shrink to 71 cents per cwt, offering less incentive for Class IV depooling.
Other information
- With December prices, the 2024 Class III milk price averaged about $18.89 per cwt, up $1.87 from the 2023 average. The 2024 Class IV milk price averaged $20.75 per cwt, up $1.63 from the 2023 average. The 2024 Class I milk base price averaged $20.35 per cwt, up $1.15 from the 2023 average.
- Voting on the FMMO modernization proposal closed on Dec. 31, 2024, with all ballots required to reach the USDA by Jan. 15. The USDA will announce approval or disapproval of each of the 11 FMMOs, as amended, through either a final rule or termination of proceeding published in the Federal Register. No date has been announced.
- The USDA’s monthly World Ag Supply and Demand Estimates (WASDE) report was released on Jan. 10. The milk production estimate for 2024 and forecast for 2025 were reduced from last month. As a result, 2025 average milk price projections were raised slightly. Read: December WASDE report forecasts lower milk production
- The USDA announced the 2025 enrollment periods for the 2025 Dairy Margin Coverage (DMC) program. Dairy producers can submit applications to the USDA’s Farm Service Agency (FSA) from Jan. 29 to March 31.
Also, check the Progressive Dairy website later this month for milk production, cull cow marketing, risk management and DMC program margin updates.
