Although they sacrificed two or three days worth of milk production because of the month in which it occurred, dairy farmers across the nation are nonetheless enjoying the highest prices for any month ever on the milk they shipped in February.
Although not yet officially announced by early Wednesday afternoon of this week, the national Class III milk base price for February was likely to be within a cent or two of $23.20 per hundred. The previous Class III record high price for a February was $17.25 per hundred in 2013 while the all-time record high Class III milk price was $21.67 per hundred in August of 2011.
The weighted all-milk prices, which were announced early this week, the National Agricultural Statistics Service put that average for February at a record high $24.70 per hundred. That price includes milk quality, volume, and component premium payments but does consider the deductions such as hauling charges and promotion fees.
In Wisconsin, the all-milk price for February is $24.90 per hundred, which is an increase of $1.10 from January. Anticipated all-milk average prices for February in other top milk production states are $26.10 per hundred in Pennsylvania, $25.60 in New York, $25.50 in Texas, $25 in Minnesota, $24.50 in Michigan, and $23.30 in California.
The surge in the all-milk price, combined with cutbacks in feed costs, raised the theoretical milk price to feed cost ratio to 2.55 for February and the milk income over feed cost to $15 per hundred. The previous highs in those calculations were 3.17 for the ratio and $14.94 per hundred for September of 2007, when the Class III milk price was $20.07 per hundred.
During the past week, some impressive daily price gains were posted in the spot market for dairy commodities on the Chicago Mercantile Exchange. For example, the AA butter spot market had 19 carload sales last week Friday and the price jumped by 10 cents per pound to $1.88, which is where it stood through Wednesday of this week even with the sale of another 10 carloads during the day's trading session.
As the result of an unfilled bid to buy one carload after the sale of one carload, the price for Cheddar barrel cheese jumped by 11.5 cents per pound on Wednesday of this week in the spot market. This put the day's closing price at $2.2425 per pound, just above the Cheddar cheese block price of $2.2375, which included a 1 cent pickup as the result of an unfilled bid to buy one carload on Wednesday.
The Class III milk futures market on Wednesday reflected the spot market with per hundred price gains of nearly 30 cents for nearby months. Trading prices for futures contracts were at $22.19 per hundred for March, $20.55 for April, in the $19s per hundred for May through September, and in the $18s per hundred for the final quarter of 2014.
If those futures prices convert into Class III cash prices without much change, new record high prices would also be set for March and April. The highest Class III cash prices for those months have been $19.40 per hundred for March of 2011 and $19.66 for April of 2004.
Dry whey futures prices also remained at a relatively high level. For the remainder of 2014, they were trading from a high of 62.95 cents per pound for March to a low of 56.8 cents for December.
In an announcement early this week, Cooperatives Working Together reported the receipt of a batch of 11 bids for financial assistance on the export of 3.142 million pounds of 82-percent butter and 782,641 pounds of Cheddar cheese to countries in Central America, Europe, North Africa, and the Middle East in deliveries scheduled from March to June.
The bids were submitted by Foremost Farms USA, Northwest Dairy Cooperative (Darigold) of Washington, Tillamook Cooperative Creamery of Oregon, and the Maryland and Virginia Milk Producers Cooperative.