Milk Marketing & Dairy Policy
Thursday, June 1, 2023
| As expected, the announced Class III price for May milk fell sharply, $2.41, from April. At $16.11 it’s $9.10 lower than last May’s record high price, and the lowest Class III price since January 2021.
The Class IV price gained $0.15/cwt. to $18.10, and the Class II price fell $0.09/cwt. to $19.10. Butterfat gained a nickel to $2.7572/lb., protein dropped a whopping $0.76/lb. to $1.8002, and other solids slipped $0.06 to $0.1877. In cash markets block cheese jumped 8.25 cents today to once again be over $1.50/lb. Wednesday’s Agricultural Prices report resulted in April’s income over feed costs to be $5.84/cwt., the lowest margin since August 2021. Producers enrolled in Dairy Margin Coverage at the $9.50 level will receive indemnity payments of $3.66/cwt., which equates to $2,735.38 for each one million pounds after sequestration of 5.7%.
Compared to March, the all-milk price fell $0.40/cwt. to $20.70, corn rose $0.03/bu. to $6.70, premium alfalfa hay increased $1.00/ton to $315, and soybean meal fell $27.15/ton to $457.25.
Year-to-date $9.50 coverage has paid $8,926.53 for each one million pounds in return for the $1,500 premium. Farm Service Agency projects payments will continue through October for the highest level of coverage. |
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Friday, April 28, 2023
| Based on USDA’s Agricultural Prices report released this afternoon, the Dairy Margin Coverage income over feed costs for March was $6.08/cwt. That’s the lowest level since August 2021. Producers with coverage for $9.50/cwt. will realize indemnity payments of $2,551.48 for each one million pounds enrolled, after sequestration of 5.7%.
The all-milk price was $21.10/cwt., down $0.50 from February. Overall feed costs decreased $0.39/cwt. from February. Premium hay fell $10/ton to $314. Corn dropped $0.13/bu. to $6.87. Soybean meal slipped $16.13/ton to $484.40. Today USDA/AMS responded to the International Dairy Foods Association (IDFA) and Wisconsin Cheese Makers Association (WCMA) requests for a federal order hearing on make allowances only by requesting more they provide more information. The IDFA and WCMA petitions were filed with USDA March 30. By statute USDA had 30 days to deny the requests for a hearing, issue an action plan to complete a hearing with 120 days, or request more information. Bruce Summers, USDA/AMS Administrator stated, “Therefore, USDA requests additional information regarding the specific make allowance values to be considered to assist the Secretary in deciding whether to initiate an FMMO rulemaking proceeding on this issue.” Word on the street is that National Milk Producers Federation will file their suite of FMMO amendment requests next week. Updating make allowances is among NMPF’s proposals. If USDA notices a hearing following NMPF’s submission, IDFA and WCMA will have the opportunity to include their make allowance proposals in that hearing. |
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Wednesday, April 19, 2023
| USDA’s Milk Production report showed an increase of 0.5% over last March. Cow numbers increased 31,000 over last year, but production per cow gained only 3 pounds. Cow numbers were up 6,000 head over February 2023, significantly less than February’s 22,000 gain over January. The total production along with changes in production and cows for top six states follows.
State Production % Pounds Cows South Dakota’s impressive growth continues adding another 13,000 cows and 24 million pounds over last March. Today USDA/AMS announced the May Class I base price to be $19.57/cwt., an increase of $0.72 over April. The current ‘average of’ formula resulted in the price being $0.10 greater than the previous ‘higher of’ formula. |
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Tuesday, April 18, 2023
| Good news on the price front. Today’s GDT event resulted in an increase of 3.2% in the overall index, the first increase since early February and only the second increase since early December. Skim milk powder posted the strongest gain, 7.0%, to $1.2592/lb. Whole milk powder nudged up 1.0% to $1.4012. Cheese gained 5.7% to $2.0008, and butter rose 4.9% to $2.1868.
Comparisons to today’s closing CME prices follow: Commodity GDT CME March’s milk production report will be released tomorrow, along with May’s Class I base price. |
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Wednesday, April 5, 2023
| This afternoon USDA announced the Class III price for March milk to be s $18.10, an increase of $0.32/cwt. from February. Class IV Price was $18.38, down $0.48. The Class IV price was s $19.52, a drop of $1.31.
The protein price was $2.4085/lb. an increase of 3.5 cents. Butterfat gained a penny to 2.7300/lb., and other solids $0.2338/lb., up two cents. |
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Tuesday, April 4, 2023
| Today’s Global Dairy Trade event saw prices for all commodities fall except for cheese. This was the seventh decline in the last eight auctions. Cheese gained 3.8% to $1.8901, but butter lost 3.3% to $2.0843, skim milk powder dropped 2.5% to $1.1698, and whole milk powder slipped 5.2% to $1.3848. Comparisons to today’s closing CME prices follow:
Commodity GDT CME Yesterday Dairy Products report for February showed total cheese production was 1.11 billion pounds, 0.4 percent above February 2022. American type cheeses gained 2.4% while Italian style cheese fell 1.4%. Butter production was up 1.6% to 186 million pounds. Nonfat dry milk increased 4.5% to 178 million pounds, and skim milk powder jumped 28.9% to 38.2 million pounds. February’s class and component prices will be released on Wednesday. |
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Friday, March 31, 2023
| Based on this afternoon’s Agricultural Prices report from USDA, the February Dairy Margin Coverage income over feed costs was $6.19/cwt., $1.75 less than January. Production covered for $6.50/cwt. and higher will receive indemnity payments. Production covered at the $9.50 level will receive $2,622.59 for each one million pounds insured.
The individual inputs of the IOFC calculation and their changes from January are: All Milk - $21.60, down $1.50/cwt. Current Farm Service Agency projections show DMC income over feed costs remaining below $9.50/cwt. through October this year. |
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Wednesday, March 22, 2023
| Yesterday’s GDT event resulted in a decline of 2.6% in the overall index. Cheese led the decline falling 10.2% to $1.8380, its second consecutive decline over 10%. In one month New Zealand cheese went from being the highest priced in the world to the lowest. Butter fell 3.0% to $2.1537. Skim milk powder dropped 3.5% to $1.2011, and whole milk powder lost 1.5% to $ 1.4642. Comparisons to today’s CME prices follow.
Commodity GDT CME This afternoon the April Class I base price was announced to be $18.85/cwt, down $0.14 from March. The ‘average of’ formula resulted in the price being $0.29 greater than the previous ‘higher of’ formula. |
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Monday, March 20, 2023
| The February Milk Production report this afternoon showed an increase of 0.8%. Cow numbers were up 37,000 from last February and 12,000 head from last month. Five of the top six states showed production increases, with only California declining.
State Production % Change Cows These six states accounted for 52% of total U.S. production. |
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Wednesday, February 2, 2023
| USDA announced the January Class III price to be $19.43, down $1.07 from December. Class IV fell $2.11 to $20.10. Class II was $21.61, down $1.50. Component prices were $2.8058 for protein (+15 cents), $2.7713 for butterfat (-38 cents), and $0.2343 for other solids (-2 cents).
Yesterday’s annual cattle inventory report showed dairy replacements over 500 pounds to be 4,337,200, down 103,400 head from a year earlier. The number expected to calve were 2,769,400, down 56,800 which should help to keep a check on growth of the milking herd. The number of beef cows declined over 1 million head, and beef replacement heifers fell over 300,000 head. It looks like there will be ample opportunity for beef-on-dairy for the coming years |
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Tuesday, September 6, 2022
Finally, some good news from the Global Dairy Trade auction. The overall index increased 4.9% today, following declines in 10 of the previous 11 events. Today’s big mover was anhydrous milk fat (butter oil), which was up 13.9%. But all other commodities advanced except for buttermilk powder. Commodities of particular interest are:
For comparison, today’s closing CME cash prices were:
Based strictly on price relationships export opportunities should continue for powder and cheese. However, a very strong U.S. dollar serves to dampen the price advantages. |
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Tuesday, August 23, 2022
| USDA’s Milk Production report showed an increase of 0.2% over last year. The number of milk cows was 67,000 fewer than last July, but 49,000 more than January and 1,000 more than last month. USDA revised June’s production down to be -0.1% from 2021.
Among the top six states: State Production Change Cow Numbers CA 3.515 billion +2.2% +4,000 Other states of interest include South Dakota (+13.1%) and Georgia (+12.3%) along with Florida (-11.4%) and New Mexico (-8.1%). The Cold Storage report showed cheese stocks were up 1% from the previous month and up 5% from July 31, 2021. Butter stocks were down 5% from last month and down 21% from a year ago. Butter jumped 8 cents at the CME today to close at $3.02/lb. |
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Tuesday, July 5, 2022
| Good afternoon,
Today’s Global Dairy Trade auction lost 4.1% in its overall index. All commodities declined except for cheese. The CME followed suit with prices down sharply. GDT butter - $2.56, down 9.1%
Today’s CME prices. Butter - $2.94, down 7 cents If there’s any consolation to be found it’s that feed prices are also falling. September corn closed below $6/bu. today, August soybeans dropped 70.5 cents to $14.39, and August soybean meal fell to $410/ton. |
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Wednesday, June 23, 2022
| Good afternoon,
Today USDA announced July’s Class I base price to be $25.87, unchanged from June and tied for the highest-ever Class I price. Today’s Cold Storage report showed total natural cheese stocks at the end of May to be up 2% over last month and 4% higher than last May. Butter stocks were up 8% over last month, but 22% lower than last year. Higher cheese inventories and lower butter inventories help to explain the recent declines in cheese prices and increases in butter prices. May’s Livestock Slaughter report showed 225,200 dairy cows were culled during the month, 12,600 fewer than in April, but 1,800 more than last May. Year-to-date culling is down 38,000 head. |
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Wednesday, June 8, 2022
| Good afternoon,
Exports - Yesterday USDA’s Foreign Agricultural Service reported April’s dairy exports grew about 1% on a milk solids equivalent basis, setting a new volume record for April. It was only the fifth month that exports surpassed 200,000 metric tons on a milk solids equivalent basis. The value of those exports reached $845.6 million, an increase of 22% over April 2021, and the second highest monthly value ever, exceeded only by March 2022. Individual commodities and their volume change from last April include:
Global Dairy Trade auction – Yesterday’s GDT event posted a 1.5% gain in its overall index, reversing a four-auction decline. Butter posted the strongest gain, 5.6%, to $2.7524/lb. on a U.S.-equivalent basis. The recent rally in the CME cash market has U.S. butter at $3.00. GDT cheese lost 3.6% to $2.4335/lb. but is still at a premium to U.S. cheddar at $2.2750. GDT skim milk powder gained 3.0% to $1.9233, above the CME price of 1.8850. Checks for May milk – Enjoy your May milk checks when they arrive next week. Many producers will see prices higher than they’ve ever seen before. |
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Thursday, June 2, 2022
| USDA released class and component prices for May milk this afternoon. Class II is $25.87/cwt., an increase of $0.16. Class III is $25.21, up $0.79. Class IV is $24.99, down $0.32. Had the Class IV price been one cent higher, all four classes would have been $25 or higher in the same month for the first time in history. The Class I price was previously announced to be $25.45. PPDs should be positive for May milk.
The protein price of $3.8696 is $0.44/lb. higher than April. The butterfat price fell 4 cents to $3.1056, and the other solids price dropped 7 cents to $0.4857. On Tuesday the Agricultural Prices report pegged April’s All-Milk price to be $27.10, a record high and $1.20 more than March. The other prices used in the Dairy Margin Coverage program were corn at $7.08/bu., alfalfa hay $271/ton, and soybean meal $475.36/ton. The income over feed costs calculated to be $12.30/cwt. |
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Tuesday, May 18, 2022
| Good afternoon,
The April Milk Production report showed a decline of 1.0% from last year. Cow numbers were 98,000 fewer than last April and unchanged from last month, even with continued high milk prices. Production per cow was unchanged from last April. Among the top six states: State Production Change Change in Cows CA 3.623 billion -0.6% +2,000 WI 2.641 billion -0.1% -1,000 TX 1.399 billion +4.7% +23,000 ID 1.375 billion 0.0% 0 NY 1.305 billion -0.8% -6,000 MI 978 million -3.4% -17,000
Other states of interest include South Dakota (+16.7% and 25,000 cows), Georgia (+12.1% and 9,000 cows), Florida (-12.1% and -12,000 cows), and New Mexico (-12.9% and 41,000 cows). This week’s Global Dairy Trade auction resulted in a -2.6% decline in the overall price index, its fifth consecutive decline. Butter fell 1.0% to $2.6082. Cheddar was down 0.1% to $2.5560. Skim milk powder lost 0.6% to $1.8670, and whole milk powder tumbled 4.9% to $1.7845. Commodity GDT CME Butter $2.6082 $2.7925 Cheese $2.5560 $2.3750 Powder $1.8670 (SMP) $1.7450 (NDM)
The June Class I mover was announced to be $25.87/cwt., up $0.42 from May, and another record high. The ‘average of, plus $0.74’ formula resulted in the price being $0.62/cwt. more than the previous ‘higher of’ formula. April’s Livestock slaughter report will be released tomorrow. |
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Thursday, April 21, 2022
Editor's Note: To follow up on this morning’s email (below), USDA reported 297,200 dairy cows were culled in March, a decline of 5,000 from last March, but an increase of 30,700 from February. Of course, February only had 28 days, so the cull rate per day was approximately the same between the two months.
Also, this morning’s email had an error in the decline of milk cows from March 2021 to March 2022. The correct number is 87,000 cows, not 68,000, which was the decline in just the 24 major dairy states.
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Yesterday’s Milk Production report showed March production declined 0.5% from last March. However, production may be poised to start increasing. January’s production was down 1.7%, and February was down 0.9%. So, the rate of decline is slowing. Furthermore, cow numbers are creeping up. March’s cow numbers were 15,000 more than February and 28,000 more than January, even though they were 68,000 less than March 2021. This afternoon’s Livestock Slaughter data will confirm if culling has slowed.
Among the top production states, Texas moved into the #3 position, which has been held by Idaho for years. The following six states account for 62% of national production.
State Production % Change Cow #s
CA 3.743 billion 0.5 +1,000
WI 2.724 billion 0.2 +3,000
TX 1.437 billion 6.7 +22,000
ID 1.392 billion 0.0 no change
NY 1.327 billion -1.0 -6,000
MI 1.006 billion -2.9 -15,000
Two other states of interest are South Dakota, up 20% (+57 million pounds) on 30,000 more cows, and New Mexico, down 9.3% (-67 million pounds) on 37,000 fewer cows.
May’s Class I mover was announced to be $25.45/cwt. and a record high, besting the previous high price of $24.47 set in May 2014. The current ‘average of’ price formula resulted in the price being $0.17/cwt. greater than the previous ‘higher of’ formula.
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Tuesday, April 19, 2022
| Today’s Global Dairy Trade auction saw the overall index decline by 3.6%, the third consecutive decline. GDT prices remain well above CME prices for comparable products, although most CME prices dropped 2 to 3 cents per pound today, perhaps in response to the GDT results.
Commodity GDT Price CME Price Cheddar $2.8055 $2.3600 Butter $3.0118 $2.7175 Powder $1.9995 (SMP) $1.7975 (NDM)
USDA will release several important dairy reports this week. March milk production comes out tomorrow. Livestock Slaughter is on Thursday, and Cold Storage on Friday. |
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Tuesday, April 5, 2022
| Today’s GDT event resulted in a decrease of 1.0% in the overall index.
GDT prices remain well above CME prices for comparable products, which would seem to bode well for future exports. However, last week while visiting with an exporter the comment was made that export logistics aren’t getting any better, and probably won’t for a few more months. He thought that the current complexities and costs of exporting are significant contributors to the disparity between U.S. and GDT prices. Foreign buyers simply can’t get as much of our product delivered as they would like. Despite those challenges, the U.S. Census Bureau today released data today that showed February dairy export volume increased 1.2% over last February. Year-to-date volume is up 0.26%. Nonfat dry milk sales were down but were still the third best February sales on record. Butter sales were up and the best since 2014. Cheese exports were the best February on record. Commodity GDT Price CME Price Butter $3.1257 $2.7400 Cheddar $2.9357 $2.2625 Powder $2.0861(SMP) $1.8400 (NDM) |
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Friday, April 1, 2022
| This week in the Weekly Market Update:
Blocks and barrels moved up this week at the CME while butter and nonfat dry milk lost ground. The March Class III price is $22.45/cwt., an increase of $1.54, while Class II and IV are both over $24. The Ag Prices report showed the Dairy Margin Coverage income over feed costs to be $10.98/cwt. For only the third time in history more soybean acres are expected to be planted than corn. The February Dairy Products report showed cheese production up 6.3% over last year, but 5.3% less than January. Butter production was down 1.4% from last year and 5.4% from last month. Nonfat dry milk declined 6.9% from last year. |
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Thursday, March 24, 2022
The April Class I price will be $24.38/cwt., an increase of $1.50 over March and $8.87 higher than last April.
The Cold Storage report showed natural cheese stocks at the end of April were 2% higher than last month and 2% higher than last year. Butter inventories were 26% lower than last year, but 20% higher than last month.
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Monday, March 21, 2022
USDA’s February Milk Production report showed overall production declined 1.0% from last February. Cow numbers were 9.37 million head, 96,000 less than a year ago, but 3,000 more than January 2022. Production per cow increased 1 pound over last year.
Among the top six states:
| State | Production | Gain/Loss | # Cows (1,000) | Gain/Loss | Lbs./Cow | Gain/Loss |
|---|---|---|---|---|---|---|
| CA | 3.322 billion | -0.20% | 1,721 | +1000 | 1,930 | -5 |
| WI | 2.444 billion | 0.70% | 1,273 | +9000 | 1,920 | even |
| ID | 1,245 billion | 0.00% | 652 | +0 | 1,910 | even |
| TX | 1,257 billion | 4.30% | 633 | +15000 | 1,205 | +52 |
| NY | 1.184 billion | -0.80% | 620 | -6,000 | 1,184 | -9 |
| MI | 899 million | -2.90% | 428 | -13,000 | 2,100 | even |
Other states of note include:
- Georgia, up 13.3% on 8,000 more cows and 50 pounds more milk per cow.
- South Dakota, up 18.3% on 27,000 more cows, but 10 pounds less per cow.
- New Mexico, down 13.1% on 44,000 fewer cows and level production.
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Wednesday, March 2, 2022
USDA’s benchmark Class III price was announced to be $20.91, an increase of $0.53 from January. The Class IV price is $24.00, an all-time high, and an increase of $0.91 from last month. The Class II price is $23.79, up $0.96. The Class I price, which was calculated in late January, was $21.64. Given that the Class IV price will be well above the statistical uniform price in each order, expect massive amounts of Class IV to be de-pooled. PPDs will remain positive.
The butterfat price is $3.0218/lb., an increase of 4.5 cents. The protein price is $2.3168, a decrease of 4 cents, and the other solids price is $0.5983, up 7 cents.
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Tuesday, March 1, 2022
Prices at this week’s GDT event surged another 5.1% in the overall index. Cheese was the big winner, up 10.9% to $2.9003/lb. GDT vs. today’s CME prices are shown below.
Commodity GDT CME
Butter $3.2142 $2.6925
Cheddar $2.9003 $2.0300
Powder $2.0326 (SMP) $1.8600 (NDM)
USDA released January’s Ag Prices Report yesterday. The all-milk price increased $2.40/cwt. to $24.20. Corn was up a dime to $5.57/bu., alfalfa was up $9/ton to $262, and soybean meal rose $21.68/ton to $421.21. The DMC feed costs were $12.66/cwt., the second-highest in life of the program. The income over feed costs calculated to be $11.54/cwt., well above the highest level of insurance of $9.50.
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