Sunday, May 3, 2009

April Milk Prices Hold Firm

While not showing much improvement, the Class III component prices for April at least held close to last month's prices. This is better than expected based on current cheese prices. The Class III milk price was announced Friday, May 1 at $10.78.

Protein was unchanged at $2.20/lb, butterfat improved a little to $1.20/lb, and other solids remained negative. The Dry Whey price was below the "make allowance" for Dry Whey, meaning that the raw material - primarily lactose - continued to have negative value! (See formulas at the USDA site)

Protein pricing and Class III milk prices are very dependent on cheese prices. The National Agricultural Statistical Service (NASS) prices lag the Chicago Mercantile Exchange (CME) prices by about two weeks (see April 2 post). CME cheese prices - also announced on Friday - gave a different - much lower view of prices than the NASS cheese price. The NASS cheese price for April was $1.27/lb. The CME weekly cheese prices - also announced on Friday - were under $1.20/lb for both Block and Barrel prices.

The Hoard's Dairyman comparison of NASS and CME prices helps illustrate where cheese prices are heading. The Class III prices that were announced on Friday could be taken as a sign of coming improvement in prices or at least a bottoming out of prices. Unfortunately, the leading indicators say that prices are still headed downward.

It is important to remember that the majority of the milk check comes from protein. Even if the price per pound is lower, more protein is still extremely important!

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