Dairy producers’ April milk checks will likely weaken based on a preview of Federal Milk Marketing Order (FMMO) milk class prices and the lowest protein component value in about a quarter century. Things should improve in May.
Announced on May 1, FMMO Class II, III and IV prices were mixed compared to a month earlier, with a decline in the Class III milk price offsetting small gains for Class I, II, IV milk prices. For those watching milk pooling, the wider Class III-IV price spread will again support substantial Class IV depooling incentives.
April 2024 FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released on May 11-14 and summarized on May 15. Watch Progressive Dairy’s website for an update.
April class prices
Class prices announced on May 1 were:
- At $21.23 per hundredweight (cwt), the April Class II milk price is up 11 cents from March and $2.03 more than April 2023. It’s the highest since October 2023.
- At $15.50 per cwt, the Class III milk price fell 84 cents from March to a three-month low and is $3.02 less than April 2023.
- At $20.11 per cwt, the April 2024 Class IV milk price is up just 2 cents from March and is $2.16 more than April 2023. It’s also the highest since November 2023.
Potentially affecting FMMO pooling, the April 2024 Class IV milk price is $4.61 more than the month’s Class III milk price, the widest spread since October 2023.
The April 2024 advanced Class I base price was previously announced at $19.18 per cwt, 38 cents more than March 2024 and 33 cents more than April a year ago. It’s the first year-over-year increase since January 2022-23.
Butterfat value up, protein dips again
Contributing to the April milk class price calculations, the value of butterfat was up from the previous month, but the protein value declined to a historical low.
The value of butterfat increased almost a dime from March to about $3.33 per pound. The value of milk protein fell 29 cents from March to just 83.5 cents per pound, the lowest since the last FMMO reform began in 2000.
The value of nonfat solids was down about 2.5 cents at 97.3 per pound, while the value of other solids fell about 5 cents, to 23.7 cents per pound.
Looking ahead
Based on FMMO advanced prices and current futures prices, the outlook for May milk prices should improve.
Already announced, the May 2024 advanced Class I base price is $18.46 per cwt, down 72 cents from April 2024 and $1.11 less than a year ago, and the lowest since February.
However, as of trading on May 1, the Chicago Mercantile Exchange (CME) Class III milk futures price closed at $18.35 per cwt for May, up $2.85 from the April price. The Class IV milk futures price closed at $20.18 per cwt for May, up 7 cents from April. If Class III-IV futures prices hold, the May Class III-IV milk price gap will shrink to $1.83 per cwt, a seven-month low and reducing some incentives for Class IV depooling.
