As we near the end of September, here are a few news pieces pertaining to dairy economics:
- Class I base price hits two-year high in October
- July fluid milk sales 4.3% higher than last year
- USDA launches assistance network to support financially distressed farmers
Class I base price hits two-year high in October
The Federal Milk Marketing Order (FMMO) advanced Class I base price has moved to a two-year high. At $23.17 per hundredweight (cwt), the October 2024 advanced Class I base price is up $1.57 from September 2024 and $3.70 more than October 2023. It’s the highest Class I base price since November 2022.
Through the first 10 months of 2024, the Class I base price now averages $20.02 per cwt, about 93 cents more than the January-October 2023 average of $19.09 per cwt.
Class I zone differentials are added to the base price at principal pricing points to determine the actual Class I price in each FMMO. With those additions, October Class I prices will average approximately $25.99 per cwt across all FMMOs, ranging from a high of $28.57 per cwt in the Florida FMMO to a low of $24.97 per cwt in the Upper Midwest FMMO. The impact on October FMMO uniform prices will be seen in early November.
The spread in the monthly advanced Class III skim milk pricing factor ($10.30 per cwt) and advanced Class IV skim milk pricing factor ($9.86 per cwt) narrowed for October to 44 cents per cwt. That means – for the third time in the past four months – the current Class I mover formula positively impacted Class I prices.
Based on Progressive Dairy calculations, using the Class I mover calculated under the “higher-of” formula would have resulted in a Class I base price about 50 cents less than the actual price determined using the “average-of plus 74 cents” formula.
A change in the formula back to higher-of calculations is included in the FMMO modernization proposal. The public comment period on the proposal closed on Sept. 13.
Read: USDA releases proposal for Federal Milk Marketing Order reform
July fluid milk sales 4.3% higher than last year
Fluid milk sales for July 2024 are higher than the same month a year earlier, keeping up the trend of slightly higher year-to-date sales. According to data from the USDA Agricultural Marketing Service:
- Total sales: July sales of packaged fluid milk products were estimated at 3.4 billion pounds, up 4.3% from the same month a year earlier. At 24.7 billion pounds, year-to-date sales of all fluid products are up 1.1%.
- Conventional products: Monthly sales totaled 3.13 billion pounds, up 3.7% from the same month a year earlier. Whole milk sales were up 4.7%, while flavored whole milk and flavored fat-reduced milk sales continue to grow by 3%-4% compared to July 2023. Year-to-date 2024 sales were estimated at 22.95 billion pounds, up 0.7% from this time last year.
- Organic products: July sales totaled 257 million pounds, up 11.7% from a year earlier. Whole milk and low-fat milk (1%) were up by 17.1% and 14%, respectively, compared to the same month last year. Year-to-date organic fluid milk sales were estimated at 1.75 billion pounds, up 6.8% from this time last year. Organic represented about 7.6% total fluid product sales in July and 7.1% in total sales year to date.
The U.S. figures are based on consumption of fluid milk products in FMMO areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.
USDA launches assistance network to support financially distressed farmers
The USDA is announcing the launch of the Distressed Borrowers Assistance Network, an initiative designed to provide personalized support to financially distressed farmers and ranchers across the nation. Through a series of cooperative agreements, this national network will connect distressed borrowers with individualized assistance to help them stabilize and regain financial footing.
Network partners include Farm Aid, Rural Advancement Foundation International, the University of Arkansas, the Socially Disadvantaged Farmers and Ranchers Policy Center at Alcorn State University and the University of Minnesota.
Through this initiative, the USDA is collaborating with community-based organizations to better serve financially distressed producers. Network partners will provide farm loan policy training to the community-based organizations so the organizations can work alongside the USDA’s Farm Service Agency (FSA) to help producers understand financing available through FSA, ensuring that when they visit an FSA office, the partner organization representative and FSA staff can better assist.
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