Friday, September 4, 2009

August Class III Price Announcements

On September 4, the August Class III milk and component prices were announced. For details, the full report on pricing is available in the September 4 Dairy Product Prices release. The only surprises were the minial impact of the new support levels for cheese announced by Secretary Vilsack on July 31.

Protein increased to $2.10/lb. and fat stayed at its current level $1.25. While the increase in protein from $1.79 to $2.10/lb is welcomed, it is still a long way from the 2007/8 levels.

The increase in support levels, which were effective August 1, are scheduled to last only through October. Due to the lag in NASS reporting of cheese prices, the new support levels were only effective for three of the five weeks in this reporting period.

Perhaps the important fact for producers is to remain cognizant of the factors that influence the top line. At the standard USDA levels of 3.1% protein and 3.5% butterfat, the protein at this month's prices is worth $6.51/cwt of milk while butterfat is worth $4.37/cwt. The big money remains in protein, and maximizing protein is still the best way to maximize income. Maximizing butterfat is the next most important factor in maximizing income.

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