November 2024 FMMO Uniform Milk Prices Show Mixed Trends
Source: DairyNews.today
Federal Milk Marketing Order (FMMO) uniform milk prices were mixed in November 2024, with some regions seeing small increases while others experienced declines, continuing the downward trend from peak levels earlier in the year.
According to FMMO data released between December 11-14, the uniform prices in eight of the 11 FMMOs fell, while areas with high Class I milk utilization saw minor gains. Florida recorded the highest uniform price at $26.79 per hundredweight (cwt), up 17 cents from October, marking the highest level since December 2022. Meanwhile, the Upper Midwest FMMO posted the lowest price at $20.33 per cwt, a decrease of $2.05 from October and the lowest in four months.
Base producer price differentials (PPDs), which reflect the difference in price paid to producers based on their location, were up in all relevant FMMOs, with most seeing increases of over $2 per cwt. These PPD adjustments impact the milk check paid to farmers, as milk handlers apply PPDs and other market adjustments.
Class Milk Prices Mixed
Class milk prices in November were largely mixed. The Class I base price dropped to $22.53 per cwt, a 64-cent decrease from October, although still $2.78 higher than in November 2023. After accounting for zone differentials, the Class I price averaged around $25.35 per cwt across all FMMOs, ranging from $27.93 in Florida to $24.33 in the Upper Midwest.
The Class II milk price rose by 51 cents to $21.52 per cwt, marking a $0.31 increase from November 2023. However, the Class III milk price saw a sharp decline of $2.90, falling to $19.95 per cwt—its lowest since July 2024, though still up by $2.80 compared to November 2023. Class IV milk price was up slightly, gaining 22 cents to $21.12 per cwt.
The Class III-Class IV price gap widened in November to $1.17 per cwt, continuing to encourage depooling of Class IV milk.
Component Values and Milk Composition
November’s milk class price calculations were also influenced by lower values for butterfat and protein compared to October. Butterfat value decreased by 2.25 cents to $3.06 per pound, the lowest since January 2024. The value of milk protein dropped more significantly, down over $1 per pound to $2.32, the lowest since August 2024.
However, the value of nonfat solids increased by 3.5 cents to $1.20 per pound, and other solids rose by more than 3 cents to $0.40 per pound, providing some price support.
Average butterfat and protein tests in pooled milk were higher in several FMMOs in November, which could help offset some of the declines in uniform prices.
Pooling Totals and Milk Production
Milk production through FMMOs in November was estimated at 11.75 billion pounds, up by 880 million pounds from the previous month, with the increase driven primarily by higher Class III milk volume. Class III milk pooling accounted for 46.9% of the total, the highest share since August. In contrast, Class IV pooling declined significantly by 1.23 billion pounds to 1.37 billion pounds, representing just 11.6% of the total pool.
Outlook for December
Looking ahead, FMMO uniform prices for December are expected to decline further. The advanced Class I base price for December has been set at $21.43 per cwt, a drop of $1.10 from November, though still $1.67 above the December 2023 price. Class I prices with zone differentials are forecast to average around $24.25 per cwt.
Class III and Class IV futures prices have also dipped, with the December Class III futures closing at $18.76 per cwt and Class IV at $20.75 per cwt as of December 13. The widening gap between Class III and IV prices is expected to further incentivize depooling.
For 2024, the average Class I base price is projected to be $20.35 per cwt, up from $19.20 in 2023, while the average Class III price is expected to reach $18.91 per cwt, up $1.89 from 2023.
The USDA’s preliminary milk production estimates for November will be released on December 19, and the final FMMO decision on modernization is set to be voted on by dairy producers by December 31.
Base producer price differentials (PPDs), which reflect the difference in price paid to producers based on their location, were up in all relevant FMMOs, with most seeing increases of over $2 per cwt. These PPD adjustments impact the milk check paid to farmers, as milk handlers apply PPDs and other market adjustments.
Class Milk Prices Mixed
Class milk prices in November were largely mixed. The Class I base price dropped to $22.53 per cwt, a 64-cent decrease from October, although still $2.78 higher than in November 2023. After accounting for zone differentials, the Class I price averaged around $25.35 per cwt across all FMMOs, ranging from $27.93 in Florida to $24.33 in the Upper Midwest.
The Class II milk price rose by 51 cents to $21.52 per cwt, marking a $0.31 increase from November 2023. However, the Class III milk price saw a sharp decline of $2.90, falling to $19.95 per cwt—its lowest since July 2024, though still up by $2.80 compared to November 2023. Class IV milk price was up slightly, gaining 22 cents to $21.12 per cwt.
The Class III-Class IV price gap widened in November to $1.17 per cwt, continuing to encourage depooling of Class IV milk.
Component Values and Milk Composition
November’s milk class price calculations were also influenced by lower values for butterfat and protein compared to October. Butterfat value decreased by 2.25 cents to $3.06 per pound, the lowest since January 2024. The value of milk protein dropped more significantly, down over $1 per pound to $2.32, the lowest since August 2024.
However, the value of nonfat solids increased by 3.5 cents to $1.20 per pound, and other solids rose by more than 3 cents to $0.40 per pound, providing some price support.
Average butterfat and protein tests in pooled milk were higher in several FMMOs in November, which could help offset some of the declines in uniform prices.
Pooling Totals and Milk Production
Milk production through FMMOs in November was estimated at 11.75 billion pounds, up by 880 million pounds from the previous month, with the increase driven primarily by higher Class III milk volume. Class III milk pooling accounted for 46.9% of the total, the highest share since August. In contrast, Class IV pooling declined significantly by 1.23 billion pounds to 1.37 billion pounds, representing just 11.6% of the total pool.
Outlook for December
Looking ahead, FMMO uniform prices for December are expected to decline further. The advanced Class I base price for December has been set at $21.43 per cwt, a drop of $1.10 from November, though still $1.67 above the December 2023 price. Class I prices with zone differentials are forecast to average around $24.25 per cwt.
Class III and Class IV futures prices have also dipped, with the December Class III futures closing at $18.76 per cwt and Class IV at $20.75 per cwt as of December 13. The widening gap between Class III and IV prices is expected to further incentivize depooling.
For 2024, the average Class I base price is projected to be $20.35 per cwt, up from $19.20 in 2023, while the average Class III price is expected to reach $18.91 per cwt, up $1.89 from 2023.
The USDA’s preliminary milk production estimates for November will be released on December 19, and the final FMMO decision on modernization is set to be voted on by dairy producers by December 31.
