Gross milk price drops

to below $20 per hundred for October shipments

For the first time since May of this year, the gross milk average price paid to dairy farmers in Wisconsin and across the United States will slip to below $20 per hundred for milk delivered in October. That announcement was made earlier this week by U.S. Department of Agriculture's National Agricultural Statistics Service.

Average per hundred gross milk prices of $19.80 for Wisconsin and $19.90 for the United States were indicated in the report. Those are down by $1.40 and $1.20 per hundred, respectively from the gross milk prices paid in September.

Gross milk prices projected for October in the 10 top milk production states include $22.30 per hundred in Pennsylvania, $21.50 in New York, $20.70 in Michigan, $20.60 in Texas and $20.30 in Minnesota. The lowest prices are $19 in New Mexico, $18.30 in Idaho and $18 in California.

All 23 of the top milk production states are expecting a price decrease from September to October. The greatest decreases between the two months are $1.90 per hundred in Michigan and $1.50 in both New York and Pennsylvania while Idaho is reporting the lowest decrease of 60 cents per hundred.

One noticeable trend in the report on milk prices for October was the significant increase in the butterfat content of milk. From September to October alone, Wisconsin's percentage went up from 3.67 to 3.77, Michigan was up from 3.61 to 3.71, Pennsylvania was up from 3.7 to 3.8 and the United States average moved up from 3.64 to 3.73 percent.

While the milk price settles downward, the Cheddar cheese spot market, which foreshadows the milk price posted an uptick during the past week. That was highlighted on Wednesday of this week as an unfilled bid to buy three carloads of Cheddar barrels on the Chicago Mercantile Exchange boosted the price by 4 cents per pound for the day's close at $1.82 per pound.

The Cheddar barrel spot market was also active on Tuesday of this week with the sale of six carloads. Cheddar blocks gained 1.25 cents on Wednesday of this week to close at $1.7925 per pound. Compared to a week earlier, the prices were up by 8 cents for barrels and 7.25 cents for blocks.

In the AA butter spot market, four carloads were sold and an offer to sell two carloads was not covered on Wednesday of this week. The day's price slipped by .25-cent to close at $1.8775 per pound. Prices in the still quiet non-fat dry milk spot market remained at $1.58 per pound for Grade Extra and $1.43 for Grade A.

Futures prices for dry whey are holding at just over 61 cents per pound for the remaining months of 2011. They then settled toward 51 cents for the latter half of 2012 before plunging to just below 40 cents for the early months of 2013.

Class III milk futures were mixed on Wednesday of this week but the day's closing prices showed some gains compared to a week earlier. This was true despite the 12-cent per hundred drops on Wednesday for January through March of 2012.

Futures prices near the end of the trading session on Wednesday were $18.40 per hundred for November, $17.68 for December, between $16.38 and $16.98 for all months of 2012 and in the lower $16s for all the trading months in 2013.

With only one trading day remaining, the October futures stood at $18.03 per hundred on Wednesday. The Class III milk cash price for October was announced this morning (Nov. 4).