Have you ever watched the daily action in the milk futures markets? It can be maddening. I do not watch it from morning trading bell to closing bell, but I track the commentary from one dairy market trading group. Lately, those daily reports literally cross the alpha and omega in market reporting. One day, the group is reporting that the wheels have fallen off either Class III or Class IV markets. The next, there’s a huge rally. And the reports have followed this roller coaster since the beginning of the year.
Ask anyone what’s the key to price, and it’s all about how much milk or milk ingredients the United States can send to the international marketplace. The unexpected is the continued norm, but at least USDA has announced is April milk prices.
It looks like Class III prices will become the basis for Class I prices, as Class III prices finally passed Class IV prices. Class III was $24.31 per hundredweight – an all-time high. Class IV dropped last month, but it was at record highs in February and March.
Class II was $24.74 per hundredweight for April. That was an increase of 52 cents from the previous month. And Class IV was $23.34 per hundredweight for April, a drop of 32 cents from the previous month.
Milk Price blog author John Geuss summed up the activity of the market simply: “After hitting record highs, it's normal to expect prices to decline. However, the demand and resulting pricing depends largely on what happens in the export market. The key exports are cheese and nonfat dry milk.”
-- Charlene M. Shupp Espenshade, special sections editor