USA: Class I Milk Base Price Hits Two-Year High in October, Driven by Market Dynamics

For the first 10 months of 2024, the Class I base price now averages $20.02 per cwt, up 93 cents compared to the same period in 2023, where it averaged $19.09 per cwt.

Class I Zone Differentials and Pricing Impact

The actual Class I price varies across FMMOs, with zone differentials added to the base price. In October, the average Class I price across all FMMOs is expected to be around $25.99 per cwt. Prices will range from $28.57 per cwt in the Florida FMMO to $24.97 per cwt in the Upper Midwest FMMO. The impact of these prices on October's uniform FMMO prices will become clear in early November.

Pricing Formula and Industry Impacts

The gap between the advanced Class III and Class IV skim milk pricing factors narrowed to 44 cents per cwt for October. This led to a positive impact on Class I prices for the third time in four months. Progressive Dairy estimates that under the "higher-of" pricing formula, the Class I base price would have been 50 cents lower, demonstrating the benefits of the "average-of plus 74 cents" formula.

Discussions about reverting to the "higher-of" formula are part of the ongoing FMMO modernization proposal, with public comments on the proposal closing on September 13.