Class III milk price hits five-year low

Ray Mueller
Now Media Group


The Class III milk base price of $14.44 per hundred for December 2015 is the lowest for any December since 2010 and the lowest for any month since January of 2011. This was a fall of 86 cents per hundred from the November 2015 price.

With the inclusion of the December Class III price, the average for the 12 months in 2015 was $15.795 per hundred. This was the lowest monthly average price for any year since 2010.

One bright item in the statistics for 2015 was the recent report by the U.S. Department of Agriculture that feed costs for dairy farmers dropped by $1.45 per hundred of milk sold compared to the costs for 2014. This put the 2015 feed costs at slightly under $12 per hundred of milk. The difference between the two years was traced to the costs of purchased feeds — $7.07 per hundred of milk in 2014 and $5.40 in 2015.

November all-milk prices

The weighted all-milk prices for milk shipped in November were announced in late December (anticipated prices are no longer provided by the National Agricultural Statistics Service). For the entire United States, that price averaged $18.20 per hundred with a 3.87 percent average in butterfat content. This was up by 50 cents from October but $4.80 per hundred less than the November 2014 price.

Wisconsin's average all-milk price for November was also $18.20 per hundred with butterfat at 3.85 percent. That price was up by 60 cents from October but $6.10 per hundred lower than the November 2014 price.

In other top milk production states, the highest November all-milk prices were $20.30 per hundred in Pennsylvania, $20 in New York, and $19.10 in Texas with its 4.04 percent butterfat average. Other prices were $16.12 per hundred in California, $17.50 in New Mexico, $17.60 in Idaho, $17.70 in Minnesota, and $17.80 in Michigan.

Spot market activity

After more activity earlier in the week, the spot market for dairy markets at the Chicago Mercantile Exchange turned relatively quiet on Wednesday of this week. The only sale on Wednesday was one carload of Grade A non-fat dry milk as the price slipped by .25 cent to 74.25 cents per pound.

The AA butter spot market price also dipped by .25 cent on Wednesday to close at $2.0375 per pound, close to where it has been for four weeks following a major drop during the 2nd week of December. Twelve carloads of butter were sold earlier in the week on the spot market.

In the spot market for Cheddar cheese on Wednesday, blocks lost 2 cents per pound as the result of an uncovered offer to sell one carload to close at $1.47. With no activity, the Cheddar barrel price stood at $1.48 per pound. Earlier in the week, two carloads of blocks and five of barrels were sold on the spot market.

Futures markets

Red ink continued to be most prominent in the futures markets for both Class III milk and dry whey in trading through the early afternoon on Wednesday. The dry whey price stood at a low of 21.75 cents per pound for February and did not rise to 30 cents until January of 2017.

Class III milk futures were trading in low double digit per hundred declines for a majority of the months in the first half of 2016. The February price of $13.15 per hundred represented the market low.

Trading board prices then rose steadily to reach $16 per hundred for September and October of 2016. They then settled in a very low trading range of the high $15s and low $16s per hundred for all subsequent months through December of 2017.

Organic exemptions

A recent ruling by the Agricultural Marketing Service of the U.S. Department of Agriculture exempts producers of organic milk from the 15-cent per hundred checkoff on milk shipments. The ruling also applies to the assessments for promotion and research on numerous other organic products.

The latest estimate is that the exemption will apply to 1,823 organic dairy producers (1,150 currently) and 11 fluid milk processors (none currently). The ruling, set to take effect on February 29, is estimated to reduce the annual checkoff collections by $4.19 million for dairy promotion and $4.53 million for fluid milk promotion.

'Goliath' losses

The late December blizzard nicknamed 'Goliath' that roared through west Texas and eastern New Mexico before heading northward resulted in the deaths of about 40,000 dairy cattle (cows, heifers, and calves) in those two states. In addition, milking schedules, milk hauling, and dairy processing plant operations were severely disrupted for about two days.