The May USDA Announcement of Class and Component Prices report is indicative of a milk market the U.S. dairy industry has not seen since 2020 as the gap between Class III and Class IV reached $5.40 per hundredweight (cwt), incentivizing depooling in Federal Milk Marketing Orders (FMMOs). This time, however, Class IV is the “higher of” with a price of $22.32 per cwt, driven by strong nonfat dry milk (NDM) and skim milk powder (SMP) prices. May’s FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released June 8-12.
As previously announced, the FMMO advanced Class I base price surpassed $20 per cwt. The price per cwt increased $1.49 per cwt from April to land at $20.15 per cwt, also up $1.78 per cwt from May of last year.
Announced June 3, May FMMO Class II and IV made strong headway with both classes rising nearly $2 month over month. Class III also rose, but at a smaller increment of 10 cents.
May class prices
Other class prices announced June 3 were:
- At $20.28 per cwt, the Class II price increased $1.46 per cwt from the previous month and $1.56 per cwt from May 2025.
- The May Class III price struggled to gain any momentum, rising just 10 cents from the month prior to $16.92 per cwt. It remained $1.65 per cwt less than the price announced last year.
- Class IV prices soared $2.10 per cwt to $22.32 per cwt in May, $4.19 per cwt more than the same month in 2025.
The gap between May Class III and Class IV prices was $5.40 per cwt, giving incentives to depool the higher-of Class IV milk from some FMMO pools and potentially lowering the blend price dairy producers may receive in an order. The last time the industry saw the spread between these two classes so large was in 2020 where the gap reached an astounding $10.78 per cwt, but with Class III on top.
Nonfat solids, protein prices rise in May
Both the prices of nonfat solids and protein rose from April to May. The value of protein reached $2.75 per pound, up from $2.52 per pound last month and up from $2.48 per pound in May 2025. The value of nonfat solids was announced at $1.82 per pound, up from $1.52 per pound in April and $1.01 per pound last year.
The May value of butterfat dipped 16 cents to $1.70 per pound. It was also down from $2.66 per pound in May 2025. The price of other solids fell 1 cent, to 38 cents per pound, but was up 6 cents from the same month last year.
Looking ahead
Market dynamics, including domestic and global demand for U.S. dairy products, is creating another strong outlook for the month ahead.
As previously announced, the June advanced Class I base price reached $22.18 per cwt. Not only is the price nearly $5 above the same advanced Class I base price of June 2025, it’s also the highest price reported since November 2024.
June Class II, III and IV prices will be announced July 1.
As of trading June 2, the Chicago Mercantile Exchange (CME) June Class III milk futures price settled at $16.23 per cwt, while the Class IV milk futures prices settled at $22.10 per cwt. If realized, the Class III-IV milk price gap will be $5.87 per cwt, once again adding incentives to depool Class IV.
