Class III-IV Spread Largest Since 2020

An article by Jenn Coyne on Progressive Dairy

The May USDA Announcement of Class and Component Prices report is indicative of a milk market the U.S. dairy industry has not seen since 2020 as the gap between Class III and Class IV reached $5.40 per hundredweight (cwt), incentivizing depooling in Federal Milk Marketing Orders (FMMOs). This time, however, Class IV is the “higher of” with a price of $22.32 per cwt, driven by strong nonfat dry milk (NDM) and skim milk powder (SMP) prices. May’s FMMO pooling estimates, uniform prices and producer price differentials (PPDs) will be released June 8-12.

As previously announced, the FMMO advanced Class I base price surpassed $20 per cwt. The price per cwt increased $1.49 per cwt from April to land at $20.15 per cwt, also up $1.78 per cwt from May of last year.

Announced June 3, May FMMO Class II and IV made strong headway with both classes rising nearly $2 month over month. Class III also rose, but at a smaller increment of 10 cents.

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