Dive into our analysis of April’s FMMO milk class prices. Understand the mixed trends and the impact of falling protein value. Will this affect your dairy business?
As we roll into May, dairy producers can look forward to changes in the Federal Milk Marketing Order (FMMO) prices, with the April 2023 FMMO pooling estimates, uniform prices, and producer price differentials scheduled for release between May 11-14. However, a heads up for the dairy industry – it seems likely the April milk checks could show a bit of a dent. We’re seeing evidence of this in the FMMO milk class prices and notably in the lowest protein component value, which is hitting a 25-year low. But don’t worry – things are looking up for May.
Let’s delve a little deeper. The FMMO Class II, III, and IV prices announced on May 1 showed some mixed results compared to a month earlier. A decline in the Class III milk price offset small gains for Class I, II, IV milk prices. Now, for those with an eye on milk pooling, you’ll see that a wider Class III-IV price spread is again supporting substantial Class IV depooling incentives.
For our forward-looking folks, the April 2024 FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released on May 11-14, with a summary to be provided on May 15. Be sure to stay updated with Progressive Dairy’s website for the latest news. Let’s get into those April class prices:
- At $21.23 per hundredweight (cwt), the April Class II milk price saw an uptick of 11 cents from March and comes out $2.03 more than April 2023. In fact, it’s achieved its highest level since October 2023.
- Not so good news for the Class III milk price, falling 84 cents from March to a three-month low of $15.50 per cwt. That’s $3.02 less than April 2023.
- It’s a small gain for the April 2024 Class IV milk price, with a modest increase of just 2 cents from March, putting it at $20.11 per cwt. This is $2.16 more than April 2023, and it’s also the highest since November 2023.
A key factor potentially affecting FMMO pooling is the April 2024 Class IV milk price. It’s currently $4.61 more than the month’s Class III milk price, marking the widest spread since October 2023. Meanwhile, the April 2024 advanced Class I base price stood at $19.18 per cwt, a rise of 38 cents more than in March 2024 and 33 cents more than April a year ago, marking the first year-over year increase since January 2022-23.
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 butterfat value increased almost a dime from March to about $3.33 per pound. Milk protein, however, fell 29 cents from March, down to just 83.5 cents per pound – the lowest since the FMMO reform began in 2000.
It’s not just protein facing a dip though; the value of nonfat solids was down about 2.5 cents, landing at 97.3 cents per pound, while the value of other solids took a 5 cent tumble, leaving it at 23.7 cents per pound.
Looking ahead based on FMMO advanced prices and current futures prices, we keep our fingers crossed that the outlook for May milk prices should improve. Already announced, the May 2024 advanced Class I base price is $18.46 per cwt, which is lower by 72 cents from April 2024 and $1.11 less than a year ago, landing it at the lowest since February. On a positive note, trading on May 1 suggests uplift with the Chicago Mercantile Exchange (CME) Class III milk futures price closing at $18.35 per cwt for May, up a robust $2.85 from the April price. The Class IV milk futures price for May closed at $20.18 per cwt, up by 7 cents from April. If these Class III-IV futures prices hold, the May Class III-IV milk price gap will shrink to $1.83 per cwt. That’s a seven-month low, potentially reducing some incentives for Class IV depooling.
