Ray Mueller
Correspondent
MADISON
Before the standard deductions from their milk check, Wisconsin’s dairy farmers will be receiving an average of $14.40 per hundred for the milk they shipped during October, according to a report early this week by Wisconsin field office of the National Agricultural Statistics Service. This is an increase of 90 cents per hundred from September but is still $4.40 less than the price in October of 2008.
The average gross milk price in the United States for October is also up by 90 cents from September to $13.80. States expecting to top the expected increase are Pennsylvania by $1.20 per hundred and Michigan and New York by $1 each.
Among the top milk production states, California continues to have the lowest average gross price of $12.30 per hundred for October compared to $11.52 for September. Other anticipated prices for October are $15.40 in Pennsylvania, which has a $2.65 per hundred state premium for the portion of its milk supply used in Class I, $14.60 for Texas, $14.40 for Michigan, $14.30 for Minnesota, $13.80 for New York, $13.50 for New Mexico and $13.00 for Idaho.
These prices are based on October’s Class III milk cash price of $12.82 per hundred, up by 71 cents from September. The projected gross milk prices were boosted a bit by the butterfat tests which showed averages of 3.75 percent or higher in Wisconsin, Minnesota, New York and Pennsylvania.
The modest increase in the Class III milk price also raised the October milk to feed ratio to 2.04, meaning that one pound of milk is worth the equivalent of 2.04 pounds of purchased feed. Prices used for feed in the formula were $3.54 per bushel for shelled corn, $9.74 per bushel for soybeans and $109 per ton for baled alfalfa hay. Dairy economics indicates that a ratio of 3 or higher is necessary for profitability in milk production.
That milk prices will go up modestly in at least the short term was confirmed with increases in the spot market prices for all manufactured dairy products in the spot market on the Chicago Mercantile Exchange on Wednesday of this week. Non-fat dry milk led the way with unfilled bids to buy that raised the prices by 5 cents per pound to $1.40 for Grade Extra and by 3 cents to $1.37 for Grade A.
Prices for AA butter also enjoyed an uptick week, mainly due to a 5-cent per pound increase as 10 carloads were sold on the spot market last week Friday. An unfilled bid to buy on Wednesday morning of this week raised the butter price by 1-cent to $1.42 per pound.
Spot market prices for Cheddar cheese also moved up on Wednesday by 1-cent to $1.53 for blocks as two carloads were sold and by 1.75-cent for barrels to $1.50 amid the sale of five carloads. The Cheddar block spot market was busy late last week with the combined sale of 10 carloads on Thursday and Friday.
Prompted by those gains, the Class III milk futures responded with modest increases for every month through December 2010 in trading through Wednesday noon of this week. Most of the monthly increases were from 14 to 25 cents per hundred.
The increases pushed the futures prices to $13.86 for November, $14.72 for December, $14.95 for January and to the low to high $15s per hundred from every month from February 2010 through October of 2011.
