It’s becoming a monthly repeat, but a widening gap in September Federal Milk Marketing Order (FMMO) Class IV and Class milk prices ensures there’s even more incentive to depool Class IV milk.

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Editor / Progressive Dairy

Based on FMMO milk class prices announced on Oct. 5, the September 2022 Class IV milk price is $4.81 more than the month’s Class III milk price, the widest spread between the two benchmark milk prices since November 2020. How that spread impacts the month’s FMMO pooling estimates, uniform prices and producer price differentials are scheduled to be released on Oct. 11-14. Check back with Progressive Dairy for an update.

September class prices

  • At $19.82 per hundredweight (cwt), the September 2022 Class III milk price dropped 28 cents from August but was $3.29 more than September 2021. Through the first nine months of 2022, the Class III milk price averaged $22.24 per cwt, $5.49 more than the same period a year earlier but 48 cents less than the January-September average in 2014.
  • At $24.63 per cwt, the September 2022 Class IV milk price declined 18 cents from August but was $8.27 more than September 2021. The January-September 2022 average stands at $24.81 per cwt, $9.55 more than a year ago and $1.61 more than nine-month average in 2014.
  • At $26.51 per cwt, the September Class II milk price was down 40 cents from August but $9.62 more than September 2021.

Butterfat-protein value spread grows

Supporting the stronger September Class IV milk price, the value of butterfat rose 16 cents from August to more than $3.56 per pound, the highest on record. It’s the eighth straight month the butterfat value topped $3 per pound.

In contrast, the value of milk protein dipped about 26 cents from August to about $1.88 per pound. The value of protein is now down about 50% since May and the lowest since March 2019.

The value of nonfat solids fell about 9 cents to $1.40 per pound. The value of other solids decreased about 1.5 cents to 30 cents per pound.


Price spread will start to narrow

Based on current milk futures prices, the Class III-IV milk price spread will start to close in October. As of the close of trading on Oct. 5, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $22.11 per cwt for October; the Class IV milk futures price closed at $24.72 per cwt. If those prices hold, the October Class III-IV milk price gap will narrow to about $2.61 per cwt, the narrowest spread since June but still incentive for Class IV depooling.

At $2 and $1.77, respectively, the gap between Class III-IV futures prices continue to narrow in November and December, respectively.